Fluctuations of a stock's return that are due to market-wide news representing common risk is the ________.
A) idiosyncratic risk
B) systematic risk
C) unique risk
D) unsystematic risk

Question

Quizplus · Accepted Answer

Systematic risk is the risk that affects the entire market or economy and is beyond the control of individual investors. It is also known as market risk or non-diversifiable risk. Idiosyncratic risk, on the other hand, is the risk that is specific to an individual stock or company and can be diversified away. Unique risk and unsystematic risk are synonyms for idiosyncratic risk.

Fluctuations of a Stock's Return That Are Due to Market-Wide