Asked by Stacie Batchelor on May 10, 2024
Verified
Russell holds stocks in four companies. If he adds stocks of several more companies he will decrease
A) firm-specific risk but not market risk.
B) firm-specific risk and market risk.
C) market risk but not firm-specific risk.
D) neither firm-specific nor market risk.
Firm-Specific Risk
Firm-specific risk refers to the risk associated with events or factors that are unique to a particular company, which can affect its stock price.
Market Risk
The risk of losses in financial markets arising from movements in market prices.
Stocks
Financial securities representing partial ownership in a company, allowing investors to claim on the company's assets and earnings.
- Evaluate the effect of spreading investments on minimizing the risk associated with investing.
Verified Answer
Learning Objectives
- Evaluate the effect of spreading investments on minimizing the risk associated with investing.
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