Bad managerial judgments or unforeseen negative events that happen to a firm are defined as "company-specific," or "unsystematic," events, and their effects on investment risk can in theory be diversified away.

Question

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This statement is accurate. Company-specific events are events that affect a particular company, such as poor managerial decisions or unexpected negative events. These events can be diversified away by investing in a diverse portfolio of stocks.

Bad Managerial Judgments or Unforeseen Negative Events That Happen to a Firm