The risk that can be diversified away in a portfolio is referred to as ___________. I) diversifiable riskII) unique riskIII) systematic riskIV) firm-specific risk
A) I, III, and IV
B) II, III, and IV
C) III and IV
D) I, II, and IV
E) I, II, III, and IV

Question

Quizplus · Accepted Answer

Diversifiable risk, unique risk, and firm-specific risk are all terms used to describe the type of risk that can be mitigated through diversification in a portfolio. Systematic risk, on the other hand, affects the entire market and cannot be diversified away.

The Risk That Can Be Diversified Away in a Portfolio