________ risk represents the portion of an asset's risk that can be eliminated by combining assets with less than perfect positive correlation.
A) Diversifiable
B) Nondiversifiable
C) Systematic
D) Total

Question

Quizplus · Accepted Answer

Diversifiable risk, also known as unsystematic risk, affects a particular company or industry and can be reduced through diversification. By combining assets with less than perfect positive correlation, investors can reduce the overall risk of their portfolio by minimizing the impact of any one particular asset's performance. Nondiversifiable risk, also known as systematic risk, affects the entire market and cannot be eliminated through diversification. Total risk is the sum of both diversifiable and nondiversifiable risk.

________ Risk Represents the Portion of an Asset's Risk That