Asked by
Natali Sanchez Sosa (Student)
on Nov 03, 2024
Verified
Diversifiable risk is also referred to as
A) systematic riskor unique risk.
B) systematic riskor market risk.
C) unique riskor market risk.
D) unique riskor firm-specific risk.
Diversifiable Risk
The component of an investment's risk that can be reduced or eliminated through diversification, which involves spreading investments across various assets to reduce exposure to any single risk.
Unique Risk
Unique Risk, also known as unsystematic risk, refers to the risk associated with a specific company or industry that can be reduced through diversification.
Systematic Risk
The portion of investment risk that is inherent in the entire market or market segment, also known as market risk, which cannot be eliminated through diversification.
- Elucidate the differences between systematic and nonsystematic risks.
- Separate and understand the distinctions among risk types like market risk, unique risk, firm-specific risk, and diversifiable risk.
Verified Answer
AT
Learning Objectives
- Elucidate the differences between systematic and nonsystematic risks.
- Separate and understand the distinctions among risk types like market risk, unique risk, firm-specific risk, and diversifiable risk.