Which of the following statements is FALSE? The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk. The volatility in a large portfolio will decline until only the systematic risk remains. When we combine many stocks in a large portfolio, the firm-specific risks for each stock will average out and be diversified. Fluctuations of a stock's returns that are due to firm-specific news are common risks.
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Home » Business » Which of the following statements is FALSE? The risk premium of a security is determined by its systematic risk and does not depend on its diversifiable risk. The volatility in a large portfolio will decline until only the systematic risk remains.