Which of the following statements about market risk and firm-specific risk is true??
A. ?Market risk is an unsystematic risk, whereas firm-specific risk is systematic risk.
B. ?Market risk is not rewarded with additional returns, whereas firm-specific risk is rewarded with additional returns.
C. ?Market risk is a diversifiable risk, whereas firm-specific risk is a nondiversifiable risk.
D. ?Market risk is a relevant risk, whereas firm-specific risk is an irrelevant risk.
E. ?Market risk includes default risk, whereas firm-specific risk includes maturity risk.
Answer: D
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