The unsystematic risk can be eliminated through diversification.

Question

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Unsystematic risk, also known as specific risk or diversifiable risk, can be reduced or even eliminated by diversifying investments across different companies, industries, or asset classes. This is because the ups and downs of a particular holding are unlikely to affect the entire portfolio. However, systematic risk, which refers to the overall market risk that cannot be diversified away, still remains.

The Unsystematic Risk Can Be Eliminated Through Diversification