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Why should there be no reward for bearing stock-specific (or idiosyncratic) risk? Choose ONE BEST answer. None of the answers is correct. B. for bearing
Why should there be no reward for bearing stock-specific (or "idiosyncratic") risk? Choose ONE BEST answer. None of the answers is correct. B. for bearing firm-specific risk. Idiosyncratic risk is only a small slice of total risk. As such, it does not need to be compensated for. The risk of one stock is negligible in a big portfolio. As such, the investor need not be compensated for bearing the risk of one stock. E. Investors do not expect to be rewarded to bear firm-specific risk because investors are not aversed to firm-specific risk
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