Asked by
Dominique Elliott
on Dec 02, 2024Verified
The two distinctly different parts of the movement of stock returns are:
A) market risk and systematic risk.
B) business-specific and unsystematic risk.
C) unsystematic risk and systematic risk.
D) All of the above
Unsystematic Risk
is the type of risk that is specific to a particular company or industry, and can be mitigated through diversification.
Systematic Risk
The risk inherent to the entire market or market segment, which cannot be eliminated through diversification.
Stock Returns
The earnings generated by investing in stocks, typically expressed as a percentage of the investment's original value.
- Comprehend the principles of systematic and unsystematic risk and their importance in the context of portfolio theory.
Verified Answer
EP
Learning Objectives
- Comprehend the principles of systematic and unsystematic risk and their importance in the context of portfolio theory.