Asked by
-Crixus Dingess
on Oct 20, 2024
Verified
Investors require a risk premium as compensation for bearing ________.
A) unsystematic risk
B) alpha risk
C) residual risk
D) systematic risk
Systematic Risk
The risk inherent to the entire market or market segment, also known as market risk, which cannot be eliminated through diversification.
Risk Premium
The additional return an investor requires to invest in a risky asset compared to a risk-free asset, compensating for the higher risk.
- Acquire knowledge about how diversification plays a critical role in reducing unsystematic risk for an investor's portfolio.
Verified Answer
DB
Learning Objectives
- Acquire knowledge about how diversification plays a critical role in reducing unsystematic risk for an investor's portfolio.
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