The relevant risk, which is the risk for which investors should be compensated, is the portion of the total risk that cannot be diversified away.

Question

Quizplus · Accepted Answer

This statement is true. The relevant risk is also known as systematic or non-diversifiable risk, which refers to the part of the total risk that is associated with the entire market or a specific industry and cannot be eliminated through diversification. Investors should be compensated for taking on this type of risk as it is inherent in investing and cannot be avoided.

The Relevant Risk, Which Is the Risk for Which Investors