Unsystematic risk:
A) can be effectively eliminated by portfolio diversification.
B) is compensated for by the risk premium.
C) is measured by beta.
D) is measured by standard deviation.
E) is related to the overall economy.

Question

Quizplus · Accepted Answer

Unsystematic risk is specific to a particular company or industry and can be diversified away by investing in a portfolio of different assets. Therefore, portfolio diversification is an effective way to eliminate unsystematic risk.

Unsystematic Risk