Which of the following statements is/are correct?
I.Unsystematic risk can be eliminated through diversification.
A)Only statement I is correct
B)Only statement II is correct
C)Both statements I and II are correct
D)Neither statement I nor II is correct

Question

Quizplus · Accepted Answer

The first statement is correct. Unsystematic risk is the risk that arises from factors that are specific to a particular company or industry. Diversification is a strategy that involves investing in a variety of different assets to reduce the overall risk of the portfolio. By spreading investments across different companies and industries, the impact of any one company's problems on the portfolio is reduced or eliminated. However, systematic risk, which is the risk that affects the market as a whole, cannot be eliminated through diversification.

Which of the Following Statements Is/are Correct