That portion of a stock's risk or variability that cannot be eliminated through investor diversification is called ________ risk.
A)unsystematic
B)systematic
C)unrealistic
D)inflation
E)volatility

Question

Quizplus · Accepted Answer

Systematic risk, also known as market risk, is the portion of a stock's risk that is caused by factors that affect the entire market, such as changes in interest rates, economic recessions, or natural disasters. This type of risk cannot be avoided or reduced by diversifying a portfolio, as it affects all stocks in the market. Unsystematic risk, on the other hand, is specific to a particular company or industry and can be reduced through diversification. Therefore, the best choice is B, systematic risk.

That Portion of a Stock's Risk or Variability That Cannot