Why is systematic risk also called non- diversifiable risk?
A)It is risk which is driven by broad market- related factors and therefore common to all securities.
B)It is a residual risk,with no way of being quantified.
C)It is risk which is specific to each individual security.
D)None of the above

Question

Quizplus · Accepted Answer

Systematic risk is also called non-diversifiable risk because it affects the entire market and cannot be eliminated through diversification. This means that all investors are exposed to this type of risk, regardless of their investment choices. Systematic risk includes factors such as economic conditions, political events, and natural disasters, which can impact the entire market simultaneously.

Why Is Systematic Risk Also Called Non- Diversifiable Risk