The risk premium of a stock is NOT affected by its ________.
A) undiversifiable risk
B) market risk
C) systematic risk
D) unsystematic risk

Question

Quizplus · Accepted Answer

The risk premium of a stock is determined by its systematic risk (market risk), which cannot be diversified away, but is not affected by its unsystematic risk (undiversifiable risk) because this risk can be eliminated through diversification.

The Risk Premium of a Stock Is NOT Affected by Its