Asked by
Adrian Reyna
on Nov 03, 2024
Verified
The risk that can be diversified away is
A) firm-specific risk.
B) beta.
C) systematic risk.
D) market risk.
Diversified Away
Refers to the reduction of risk in a portfolio by investing in a variety of assets, thus minimizing the impact of any single investment's performance.
Firm-specific Risk
The risk associated with an individual company, which can be mitigated through diversification.
Beta
A metric used in finance to determine an investment's volatility or risk as compared to the overall market.
- Identify and distinguish between systematic and nonsystematic risks.
- Identify the differences between types of risks such as market risk, unique risk, firm-specific risk, and diversifiable risk.
Verified Answer
SM
Learning Objectives
- Identify and distinguish between systematic and nonsystematic risks.
- Identify the differences between types of risks such as market risk, unique risk, firm-specific risk, and diversifiable risk.