Diversiﬁcation works because unsystematic risk exists.

Name: Diversiﬁcation works because unsystematic risk exists.
Brand: Quizplus
Rating: 4.9 (30 reviews)

Question

Quizplus · Accepted Answer

Diversification helps minimize unsystematic risk, which is the risk specific to a particular company or industry. By investing in a range of assets, investors can reduce their exposure to the risks of any individual asset. However, diversification cannot eliminate systematic risk, which is the risk inherent in the overall market or economy.

Diversiﬁcation Works Because Unsystematic Risk Exists