This is defined as the portion of total risk that is attributable to firm or industry factors and can be reduced through diversification.
A) firm specific risk
B) market risk
C) modern portfolio risk
D) total risk

Question

Quizplus · Accepted Answer

Firm specific risk, also known as unsystematic risk, is the portion of total risk that is unique to a particular firm or industry and can be diversified away through investing in a portfolio of different securities. Market risk, on the other hand, is the risk inherent in the overall market and cannot be eliminated through diversification. Modern portfolio theory aims to minimize total risk by diversifying across multiple asset classes with varying levels of risk and return. Total risk is the combination of both firm specific and market risk.

This Is Defined as the Portion of Total Risk That