According to the market model, the total risk of any security measured by its variance consists of ______ risk and _____ risk.

Question

Quizplus · Accepted Answer

According to the market model, the total risk of any security measured by its variance consists of market risk and unique risk. Market risk is the risk that cannot be diversified away, such as fluctuations in the overall market, while unique risk is the company-specific risk that can be diversified away, such as management changes or industry disruptions. Therefore, option D is the correct answer.

According to the Market Model, the Total Risk of Any