Which two of the statements accurately relate to unsystematic risk?
A) Unsystematic risk can be accurately measured using beta.
B) Unsystematic risk highlights risks common to all firms.
C) An efficient market will not reward unsystematic risk.
D) Unsystematic risk can be eliminated by diversification.

Question

Quizplus · Accepted Answer

Unsystematic risk is specific to a company or industry and can be eliminated through diversification. It is not rewarded in an efficient market because it can be diversified away. Beta measures systematic risk, not unsystematic risk.

Which Two of the Statements Accurately Relate to Unsystematic Risk