Many former employees at Enron, an energy trading and supply company, had a large part of their portfolio invested in Enron stock. These employees were bearing a high degree of risk.

Question

Quizplus · Accepted Answer

Unsystematic risk refers to risk that is specific to a particular company or industry, and cannot be diversified away. The fact that the former employees' portfolios were heavily invested in Enron stock means that they were subject to a high degree of unsystematic risk, as any negative events or changes specific to Enron would have a significant impact on the value of their portfolio.

Many Former Employees at Enron, an Energy Trading and Supply