In designing a portfolio, the only relevant risk is
A) total risk.
B) unsystematic risk.
C) event risk.
D) nondiversifiable risk.

Question

Quizplus · Accepted Answer

Nondiversifiable risk, also known as systematic risk or market risk, is the only relevant risk to consider in designing a portfolio as it cannot be diversified away. Unsystematic risk, event risk, and total risk can be reduced through diversification.

In Designing a Portfolio, the Only Relevant Risk Is