Consider a day on which the S&P/TSX 60 Index, an index of 60 large stocks, rose 59 points. On
that same day, Alcan, which is one of the stocks in the Index, announced some unexpectedly bad
news. The price of Alcan declined $10 on that same day. Using this example, discuss systematic
risk, portfolio diversiﬁcation, and asset speciﬁc risk.

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The Answer of Consider a day on which the S&P/TSX 60 Index, an index of 60 large stocks, rose 59 points. On
that same day, Alcan, which is one of the stocks in the Index, announced some unexpectedly bad
news. The price of Alcan declined $10 on that same day. Using this example, discuss systematic
risk, portfolio diversiﬁcation, and asset speciﬁc risk.

Consider a Day on Which the S&P/TSX 60 Index, an Index