Which of the following statements best describes the relationship between total risk, systematic risk and unsystematic risk?
A)Total risk is the product of systematic and unsystematic risk.
B)Total risk is the sum of systematic and unsystematic risk.
C)Total risk is the quotient of systematic and unsystematic risk.
D)Total risk is the difference between systematic and unsystematic risk.

Question

Quizplus · Accepted Answer

Total risk is the sum of systematic risk, which is the risk that cannot be diversified away and is inherent in the overall market, and unsystematic risk, which is the risk that can be diversified away by holding a diversified portfolio of assets. Therefore, option B is the correct choice.

Which of the Following Statements Best Describes the Relationship Between