Answer: b. The diversifiable risk of your portfolio will likely decline, but the expected market risk should not change.
Explanation:
Diversifiable risk is a risk that a particular security has or which can be seen in a certain sector. Market risk occurs when there's possibility that a particular investor will make loss due to certain factors which affects the entire market.
In the above scenario, the most likely to occur will be that the diversifiable risk of the portfolio will likely decline, but the expected market risk should not change.
It should be noted that diversification won't eliminate market risk. When more stocks are added, this brings about decline in diversification risk but market risk won't change.
Answer:
umm........i think its A..............
Explanation:
Answer:
3 years after the right of return has expired
Explanation:
Generally accepted accounting principles (GAAPs) specify the scenario wherein revenue is to be recognized.
As per the accrual principle, revenue is to be recognized when earned and not when actual cash is received against it.
In the given case, the company allows it's customers to return the products sold within a period of three years. Hereby, the company must make a provision for contingency against future returns.
Here, the business should be able to estimate the number of vacuums that would be returned. Here, the company is unable to do so owing to no past record or history.
Hence, the company may have to wait till maximum period of 3 years i.e the time when products can no longer be returned, for recognizing revenue associated with the sales.
