Asked by
Ashley McCain
on Dec 02, 2024
Verified
____ risk CAN be diversified away by investing in a diversified portfolio.
A) Systematic
B) Business-specific
C) Unsystematic
D) Both b & c
Unsystematic Risk
A type of risk that affects a very specific group of securities or an individual security and can be mitigated through diversification.
Business-Specific Risk
Also known as unsystematic risk, it refers to the risk associated with a specific sector or company.
Diversified Portfolio
An investment strategy that involves spreading investments across various asset classes to reduce risk.
- Acknowledge the contribution of diversification in lowering unsystematic risk.
- Recognize the differentiation between diversifiable and non-diversifiable risks.
Verified Answer
SF
Learning Objectives
- Acknowledge the contribution of diversification in lowering unsystematic risk.
- Recognize the differentiation between diversifiable and non-diversifiable risks.