Investors can avoid unsystematic risk by
A)using the capital asset pricing model.
B)investing in stocks with low PE ratios.
C)holding diversified portfolios.
D)using the free cash flow model.

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific risk, is the risk that is unique to a specific company or industry. By holding diversified portfolios, investors can spread their investments across various sectors and asset classes, thereby reducing the impact of any single investment's poor performance on the overall portfolio. This diversification strategy helps in mitigating unsystematic risk.

Investors Can Avoid Unsystematic Risk by