Portfolio diversification eliminates the systematic risk that is unique to an individual asset although nonsystematic risk will remain.

Name: Portfolio diversification eliminates the systematic risk that is unique to an individual asset although nonsystematic risk will remain.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Portfolio diversification is designed to eliminate or reduce nonsystematic risk (unique to individual assets), not systematic risk, which affects the entire market and cannot be eliminated through diversification.

Portfolio Diversification Eliminates the Systematic Risk That Is Unique to an Individual