Risk factors that are expected to affect only a specific firm are referred to as:
A) market risk.
B) diversifiable risk.
C) systematic risk.
D)risk premiums.

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic risk or specific risk, only affects a specific firm or industry and can be diversified away by investing in a portfolio of different assets. Market risk or systematic risk, on the other hand, affects the overall market or economy and cannot be diversified away. Risk premiums are the additional return investors demand to compensate for taking on risk, and do not refer specifically to a type of risk.

Risk Factors That Are Expected to Affect Only a Specific