Which statement is correct concerning macro risk exposure?
A) All firms face equal macro risk exposure.
B) Only portfolios of stocks face macro risk exposure.
C) Macro risk exposure affects the cost of capital.
D) Macro risk exposure is less important to diversified investors than micro risk exposure.

Question

Quizplus · Accepted Answer

Macro risk exposure can affect the overall market and economy, which can impact the cost of capital for firms. A is incorrect because firms can face varying degrees of macro risk exposure depending on their industry and location. B is incorrect because portfolios of different asset classes can also face macro risk. D is incorrect because both macro and micro risk exposures are important for investors to consider, and the importance can vary depending on individual investor preferences and goals.

Which Statement Is Correct Concerning Macro Risk Exposure