Total risk of a security can be viewed as consisting of two parts. Which of the following apply?
I. verifiable risk
II. non-verifiable risk
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Total risk of a security can be viewed as consisting of two parts. Which of the following apply?
 I. verifiable risk
II. non-verifiable risk
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

The correct terms are "systematic risk" and "unsystematic risk," not "verifiable risk" and "non-verifiable risk." Systematic risk affects the entire market and is unavoidable, while unsystematic risk is specific to a single company or industry and can be mitigated through diversification.

Total Risk of a Security Can Be Viewed as Consisting