Unsystematic risk is deﬁned as the risk that:
A) Affects almost every ﬁnancial asset that is sold in the marketplace.
B) Relates to the overall economy, such as inﬂation and GDP growth.
C) Serves as the basis for determining the amount of the risk premium.
D) Is derived from an event that affects a single ﬁrm or a limited number of assets.
E) Is generated by expected news.

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as company-specific risk, is the risk that is derived from an event that affects a single firm or a limited number of assets. This type of risk can be mitigated through diversification. The other options describe systemic or macroeconomic risks.

Unsystematic Risk Is Deﬁned as the Risk That