Risk factors that are expected to affect only a specific firm are referred to as:
A)Market risk
B)Diversifiable risk
C)Systematic risk
D)Risk premiums

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic or idiosyncratic risk, refers to risks that affect individual companies and can be diversified away by holding a portfolio of different investments. Examples of diversifiable risk include company-specific events such as management changes, product recalls, or lawsuits. Market risk (A) and systematic risk (C) are types of risk that affect the entire market or a large segment of it. Risk premiums (D) are additional compensation investors receive for bearing risk.

Risk Factors That Are Expected to Affect Only a Specific