Non-diversifiable risk:
A)can be cut almost in half by investing in 10 stocks provided each stock is in a different industry.
B)can almost be eliminated by investing in 35 diverse securities.
C)remains constant regardless of the number of securities held in a portfolio.
D)has little, if any, impact on the actual realized returns for a diversified portfolio.
E)should be ignored by investors.

Question

Quizplus · Accepted Answer

Non-diversifiable risk, also known as systematic risk, is the risk that cannot be eliminated by diversification, as it is inherent in the entire market or economy. This risk remains constant regardless of the number of securities held in a portfolio. Therefore, option C is the correct answer.

Non-Diversifiable Risk