If an FIs trading portfolio of stock is not well-diversified,the additional risk that must be taken into account is

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Unsystematic risk, also known as idiosyncratic risk, is the risk associated with individual assets or securities that can be reduced through diversification. If an FIs trading portfolio of stock is not well-diversified, this additional risk must be taken into account. Default risk refers to the risk that a borrower will default on their debt obligations, timing risk refers to the risk associated with the timing of investments, and interest rate risk refers to the risk associated with changes in interest rates. While these risks may also be relevant for an FI, they are not directly related to the lack of diversification in the trading portfolio.

If an FIs Trading Portfolio of Stock Is Not Well-Diversified,the