If you build a large enough portfolio,you can diversify away all ________ risk,but you will be left with ________ risk.
A)diversifiable,unsystematic
B)unsystematic,systematic
C)systematic,undiversifiable
D)diversifiable,diversifiable
E)common,unsystematic

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic risk, can be reduced through diversification. However, systematic risk, also known as market risk, cannot be diversified away because it is inherent in the overall market. Therefore, option B is the correct answer as it states that diversifiable risk can be eliminated, but unsystematic risk remains.

If You Build a Large Enough Portfolio,you Can Diversify Away