Asked by Logan MacNeil on Jul 16, 2024
Verified
As diversification increases, the unique risk of a portfolio approaches
A) 1.
B) 0.
C) infinity.
D) (n −1) × n.
Unique Risk
Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called firm-specific risk, nonsystematic risk, or diversifiable risk.
Diversification
Diversification is an investment strategy that aims to reduce risk by allocating investments among various financial instruments, industries, geographic locations, or other categories.
Portfolio
A collection of investments, such as stocks, bonds, commodities, and real estate, held by an individual or an institution.
- Acquire knowledge on the topics of diversification, systematic risk, and unsystematic risk as they apply to portfolio management.
Verified Answer
Learning Objectives
- Acquire knowledge on the topics of diversification, systematic risk, and unsystematic risk as they apply to portfolio management.
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