The relevant measure of risk for a diversified portfolio of assets is the portfolio's level of:
A) systematic risk
B) unsystematic risk
C) diversifiable risk
D) company specific risk

Question

Quizplus · Accepted Answer

Systematic risk, also known as market risk, is the relevant measure of risk for a diversified portfolio because it affects all investments across the market and cannot be eliminated through diversification. Unsystematic risk, diversifiable risk, and company-specific risk can be reduced or eliminated by holding a diversified portfolio of assets.

The Relevant Measure of Risk for a Diversified Portfolio of Assets