Unsystematic risk is
A) the risk associated with movements in securities prices
B) reduced through diversification
C) higher when interest rates rise
D) the risk of loss of purchasing power

Question

Quizplus · Accepted Answer

Unsystematic risk is also known as specific risk or diversifiable risk. This type of risk can be mitigated or reduced through diversification by investing in a variety of assets or securities. Therefore, choice B is the correct answer. Choice A refers to market risk or systematic risk. Choice C refers to interest rate risk, which is a specific type of systematic risk. Choice D refers to inflation risk or purchasing power risk, which is a different type of risk.

Unsystematic Risk Is