Unique security risk can be eliminated from an investor's portfolio through diversification.

Question

Quizplus · Accepted Answer

Diversification is the process of spreading investments across different assets and classes to reduce the overall risk of a portfolio. By investing in a variety of assets, an investor can eliminate unique security risk, which means the risk associated with investing in a particular security or company. While diversification cannot eliminate all risks, it can help reduce the impact of any one particular risk on the portfolio.

Unique Security Risk Can Be Eliminated from an Investor's Portfolio