Unsystematic risk is also known as:
A)market risk
B)nondiversifiable risk
C)firm-specific risk
D)macroeconomic risk

Question

Quizplus · Accepted Answer

Unsystematic risk is also known as firm-specific risk, which includes risks that are unique to a particular company, such as management issues, operational problems, and legal challenges. It can be mitigated to some extent through diversification, but cannot be eliminated entirely. Market risk (A) is also known as systematic risk and affects the entire market or a specific sector. Nondiversifiable risk (B) is another name for systematic risk, which cannot be eliminated through diversification. Macroeconomic risk (D) refers to broad economic factors such as inflation, interest rates, and GDP growth, which affect the overall economy and all firms within it.

Unsystematic Risk Is Also Known As