Asked by
Marcus Enfiajan
on Nov 03, 2024
Verified
Firm-specific risk is also referred to as
A) systematic riskor diversifiable risk.
B) systematic riskor market risk.
C) diversifiable risk or market risk.
D) diversifiable risk or unique risk.
Firm-specific Risk
The risk associated with an individual company, distinct from market risk, that can affect the company's stock price.
Diversifiable Risk
The portion of investment risk that can be reduced or eliminated through diversification in an investment portfolio.
Unique Risk
Another term for diversifiable risk, emphasizing the idea that this risk is specific to an individual investment and not the market as a whole.
- Explain the distinction between systematic and nonsystematic risks.
- Distinguish between various risk categories, including market risk, unique risk, firm-specific risk, and diversifiable risk.
Verified Answer
AO
Learning Objectives
- Explain the distinction between systematic and nonsystematic risks.
- Distinguish between various risk categories, including market risk, unique risk, firm-specific risk, and diversifiable risk.