Unsystematic risk refers to risk that is
A) undiversifiable.
B) diversifiable.
C) due to fundamental risk factors.
D) due to market risk.
E) none of the above

Question

Quizplus · Accepted Answer

Unsystematic risk is also known as diversifiable risk because it can be reduced or eliminated through diversification. This type of risk is specific to a company, industry, or sector and is not related to the overall market. Therefore, by holding a diversified portfolio, investors can minimize the impact of unsystematic risk on their portfolio returns.

Unsystematic Risk Refers to Risk That Is