Which one of the following risks can be progressively eliminated by adding stocks to a portfolio?
A) Systematic risk
B) Specific risk
C) Market risk
D) Inflation rate risk

Question

Quizplus · Accepted Answer

Specific risk, also known as company-specific risk, can be reduced by diversifying a portfolio across multiple individual stocks. By owning shares in multiple companies across different industries and sectors, specific risks unique to any one company can be mitigated. However, adding stocks to a portfolio cannot eliminate systematic risk, market risk, or inflation rate risk, as these are inherent risks that affect the entire market or economy.

Which One of the Following Risks Can Be Progressively Eliminated