If you build a large enough portfolio, you can diversify away all ________ risk, but you will be left with ________ risk.
A) diversifiable, unsystematic
B) unsystematic, systematic
C) systematic, undiversifiable
D) undiversifiable, diversifiable

Question

Quizplus · Accepted Answer

Unsystematic risk can be diversified away by building a large enough portfolio, leaving investors exposed to systematic risk, which affects the entire market and cannot be eliminated through diversification.

If You Build a Large Enough Portfolio, You Can Diversify