Nondiversifiable risk is that risk associated with specific firms and industries and includes labor conflicts,new competition,consumer market changes,and many other factors.

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Nondiversifiable risk is also known as systemic or market risk, which cannot be reduced by diversifying a portfolio. It is the risk that affects the overall market or economy and includes events such as natural disasters, wars, inflation, and political instability. The risk associated with specific firms and industries is diversifiable or company-specific risk.

Nondiversifiable Risk Is That Risk Associated with Specific Firms and Industries