Diversification of assets cannot eliminate which kind of risk?
A)Systemic risk
B)Idiosyncratic risk
C)Market risk
D)Individual risk

Question

Quizplus · Accepted Answer

Diversification of assets can reduce or eliminate idiosyncratic and individual risks, as well as some market risks. However, systemic risk, which is the risk associated with the entire market or economy, cannot be eliminated through diversification. This is because it affects all investments simultaneously, making it impossible to avoid.

Diversification of Assets Cannot Eliminate Which Kind of Risk