Which one of the following is eliminated, or at least greatly reduced, by increasing the number of individual securities held in a portfolio?
A)number of economic states
B)various expected returns caused by changing economic states
C)market risk
D)diversifiable risk
E)nondiversifiable risk

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic risk, is the risk specific to individual securities or companies. By increasing the number of individual securities held in a portfolio, the impact of any one security's performance on the overall portfolio is reduced. This means that any specific risk of one security can be diversified away, resulting in a reduction of overall portfolio risk. The other answer choices are not eliminated or greatly reduced by increasing the number of individual securities held in a portfolio.

Which One of the Following Is Eliminated, or at Least