Which of the following statements are correct concerning diversifiable,or unsystematic,risks?
I.Diversifiable risks can be largely eliminated by investing in thirty unrelated securities.
II.There is no reward for accepting diversifiable risks.
III.Diversifiable risks are generally associated with an individual firm or industry.
IV.Beta measures diversifiable risk.
A) I and III only
B) II and IV only
C) I and IV only
D) I, II, and III only
E) I, II, III, and IV
F) None of the above.

Question

Quizplus · Accepted Answer

Diversifiable risks can be reduced by diversification (I) and are specific to a firm or industry (III). There is no reward for taking on diversifiable risks (II). Beta measures systematic risk, not diversifiable risk, so IV is incorrect.

Which of the Following Statements Are Correct Concerning Diversifiable,or Unsystematic,risks