Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk.

Name: Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk.
Brand: Quizplus
Rating: 4.8 (37 reviews)

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific or idiosyncratic risk, is unique to a particular company or industry and can be mitigated through diversification. Therefore, it is not rewarded with higher expected returns for taking on more of it, unlike systematic risk, which affects the entire market and cannot be diversified away.

Unsystematic Risk Is Rewarded When It Exceeds the Market Level