Risk that affects a large number of assets, each to a greater or lesser degree, is called _____ risk.
A)idiosyncratic
B)diversiﬁable
C)systematic
D)asset-speciﬁc
E)total

Question

Quizplus · Accepted Answer

Systematic risk affects a large number of assets and cannot be diversified away. It is also known as market risk. Idiosyncratic risk, on the other hand, affects individual assets or specific industries and can be diversified away. Diversifiable risk is another name for idiosyncratic risk. Asset-specific risk refers to risk factors that affect only one asset. Total risk is the sum of systematic and idiosyncratic risk.

Risk That Affects a Large Number of Assets, Each to a Greater