Asked by
Shanthi Sings Sinhala Songs
on Nov 04, 2024
Verified
The risk that cannot be diversified away is
A) firm-specific risk.
B) unique.
C) nonsystematic risk.
D) market risk.
Diversified Away
The risk that can be reduced or eliminated in a portfolio through investments in a variety of assets, thus not tied to the performance of a single investment.
Market Risk
The risk of losses in positions arising from movements in market prices.
Firm-specific Risk
The portion of an asset's risk that is attributable to the company's individual factors, uncorrelated with general market movements.
- Clarify the differentiation between systematic and nonsystematic risks.
- Understand and categorize the variance among risk types, including market risk, unique risk, firm-specific risk, and diversifiable risk.
Verified Answer
RT
Learning Objectives
- Clarify the differentiation between systematic and nonsystematic risks.
- Understand and categorize the variance among risk types, including market risk, unique risk, firm-specific risk, and diversifiable risk.