The risks that diversification cannot eliminate are:
A)interest rate risk.
B)risk due to a recession.
C)inflation risk.
D)systematic risk.
E)All of the above

Question

Quizplus · Accepted Answer

Diversification can reduce or eliminate unsystematic risk, which is specific to individual investments or sectors. However, it cannot eliminate systematic risks that affect the entire market or economy, such as interest rate risk, recession risk, inflation risk, and other broad economic factors. These are risks that all investments face regardless of the diversification level.

The Risks That Diversification Cannot Eliminate Are