Which one of the following qualifies as diversifiable risk?
A)market risk
B)systematic risk associated with an individual security
C)market crash
D)the systematic portion of an expected return
E)the unsystematic portion of an unexpected return

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic risk, refers to the risk that is unique to a specific company or industry. This can be mitigated through diversification. The unsystematic portion of an unexpected return (choice E) fits this description, as it represents variability in returns that can be reduced by holding a variety of investments.

Which One of the Following Qualifies as Diversifiable Risk