6. Diversifiable risk is also referred to asA. systematic risk, unique risk.B. systematic risk, market risk.C. unique risk, market risk.D. unique risk, firm-specific risk.E. none of the above.
Question
- Diversifiable risk is also referred to asA. systematic risk, unique risk.B. systematic risk, market risk.C. unique risk, market risk.D. unique risk, firm-specific risk.E. none of the above.
Solution
D. unique risk, firm-specific risk.
Diversifiable risk, also known as unsystematic risk, is company or industry specific. This type of risk can be reduced through diversification. Hence, it is also referred to as unique risk or firm-specific risk.
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