In a well-diversified portfolio, ________ risk is negligible.
A) nondiversifiable
B) market
C) systematic
D) unsystematic

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific risk, can be reduced or eliminated through diversification. Therefore, in a well-diversified portfolio, unsystematic risk is negligible. Systematic risk, also known as market risk or nondiversifiable risk, cannot be eliminated through diversification and affects the entire market, not just specific assets.

In a Well-Diversified Portfolio, ________ Risk Is Negligible