8. Systematic risk is rewarded with a premium in the marketplace because: A. risk is particular...
8. Systematic risk is rewarded with a premium in the marketplace because:
A. risk is particular to the stock or industry.
B. it represents a random occurrence which could not have been foreseen.
C. it is associated with market movements which cannot be eliminated through diversification.
D. None of the above
Homework Answers
Answer is Option C: It is assocaited with market movements which cannot be elimnated through Diversification.
Systematic Risk means risk which is part of the system, that is the market and these risk is unavoidable bythe corporation. These risk are existing to all the market players and cannot be elimanted by any. These risk cannot be eliminated by diversification.
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