Unsystematic risk ________.
A) does not change
B) can be eliminated through diversification
C) cannot be estimated
D) affects all firms in a market

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as company-specific risk, can be reduced or eliminated through diversification. Diversification allows an investor to spread their portfolio across different company stocks, industries, and sectors, reducing the impact of risks specific to one company. The other options are incorrect as unsystematic risk can change, can be estimated, and only affects individual companies or sectors, not all firms in a market.

Unsystematic Risk ________