The relationship that exists between unsystematic risk and the number of securities held in an investment portfolio is:

Question

Quizplus · Accepted Answer

Unsystematic risk can be diversified by holding a portfolio of securities. As the number of securities held in the portfolio increases, the unsystematic risk decreases. Therefore, the relationship between the number of securities held in the portfolio and unsystematic risk is inverse until unsystematic risk is removed. However, systematic risk cannot be diversified away, as it affects the entire market or economy.

The Relationship That Exists Between Unsystematic Risk and the Number