Which of the following statements is correct a/) When a company - specific rish

Question

Which of the following statements is correct a/) When a company - specific rish has been diversified away, the inherent risk that remains is market risk, which is constant for stocks in the market b)The SML relates its required return to a firms market risk. The slope and intercept of this line cannot be controlled by the financial manager. c) Portfolio diversification reduces the variability of returns on an individual stock. d( A stock with a beta of -1.0 has a zero market risk if held in a 1 stock portfolio.

Explanation / Answer

b)The SML relates its required return to a firms market risk.

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