Which of the following statements is false? because investors can eliminate firm-specific risk "for free" by diversifying their portfolios, they will not require a reward or risk premium for holding it. over any given period, the risk of holding a stock is that the dividends plus the final stock price will be higher or lower than expected, which makes the realized return risky. because investors are risk averse, they will demand a risk premium to hold unsystematic risk. the risk premium for diversifiable risk is zero, so investors are not compensated for holding firm-specific risk.
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Which of the following statements is false? because investors can eliminate firm-specific risk "for...
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