The unsystematic risk of a specific security
A) is likely to be higher in an increasing market.
B) results from factors unique to the firm.
C) depends on market volatility.
D) cannot be diversified away.

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific risk, is unique to a particular company or industry and can be reduced through diversification. It does not depend on overall market movements but rather on factors such as a company's management decisions, financial health, and industry trends.

The Unsystematic Risk of a Specific Security