Investors can eliminate what type of risk by diversifying?a.Total riskb.Unsystematic riskc.Beta riskd.Systematic risk
Question
Investors can eliminate what type of risk by diversifying?a.Total riskb.Unsystematic riskc.Beta riskd.Systematic risk
Solution
Investors can eliminate unsystematic risk by diversifying.
Here's why:
a. Total risk: This includes all the different types of risk an investment or portfolio may face. It's impossible to eliminate all risk from investing, even with diversification.
b. Unsystematic risk: This is the risk associated with a specific company or industry. By diversifying - spreading investments across a variety of companies, industries, or asset
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