The unsystematic risk of a specific security
A)is likely to be higher in an increasing market.
B)results from factors unique to the firm.
C)depends on market volatility.
D)cannot be diversified away.
E)none of the above.

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as company-specific risk, is the risk that comes from factors that are specific to an individual company, such as management quality, product performance, and competition. Therefore, it results from factors unique to the firm. The other choices are not necessarily true for unsystematic risk.

The Unsystematic Risk of a Specific Security