If an investor buys enough stocks, he or she can, through diversifica- tion, eliminate all of the non-market risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all market risk.

Question

Quizplus · Accepted Answer

Diversification can spread out the non-market risk, such as company-specific risks, but it cannot eliminate market risk since it affects the entire market.

If an Investor Buys Enough Stocks, He or She Can