The relevant portion of an asset's risk attributable to market factors that affect all firms is called
A) unsystematic risk.
B) diversifiable risk.
C) systematic risk.
D) none of the above.

Question

Quizplus · Accepted Answer

The relevant portion of an asset's risk attributable to market factors that affect all firms is called systematic risk. This type of risk cannot be diversified away as it relates to overall market conditions and is also known as market risk. Unsystematic risk, on the other hand, is specific to a particular company or industry and can be reduced through diversification. Therefore, choice A (unsytematic risk) and B (diversifiable risk) are not the best choices.

The Relevant Portion of an Asset's Risk Attributable to Market