Diversification works because: i. unsystematic risk exists. ii. combining stocks into a portfolio reduces the standard deviation of each stock in the portfolio. iii. firm-specific risk can be dramatically reduced if not eliminated. a) i onlyb) iii onlyc) i and ii onlyd) i and iii onlye) i, ii, and iii

An important source of public scrutiny is "watchdogs." these are: the efforts of a firm's competitors, including how often the competitors attack the firm's strategies. taxpayer-supported government agencies that limit a firm's ability to compete in foreign markets. companies designated by the government to only produce products that support the government defense program. socially conscious groups that make it their mission to measure the social responsibility levels of businesses, and provide consumers with their opinions about the level of corporate responsibility of various companies.