Systematic risk is rewarded with higher returns in the market because:
A) it is associated with market movements which cannot be eliminated through diversification
B) it is a microeconomic risk
C) that risk is unique to a firm or an industry
D) initial capital outlays are higher to purchase the investment

Question

Quizplus · Accepted Answer

Systematic risk is the risk that affects the entire market or economy and cannot be eliminated through diversification. Investors are compensated with higher returns for taking on this risk because it is not possible to avoid it through diversification.

Systematic Risk Is Rewarded with Higher Returns in the Market