Unsystematic risk ____.
A) is caused by factors affecting the market as a whole
B) is the predominant determinant of individual security risk premium
C) cannot be mitigated via diversification
D) can be mitigated via diversification

Question

Quizplus · Accepted Answer

Unsystematic risk refers to risks that are unique to a particular company or industry and cannot be diversified away by holding a diversified portfolio. However, diversification can help to mitigate unsystematic risk to a certain extent. Therefore, the correct answer is D.

Unsystematic Risk ____