As diversification increases, the unsystematic risk of a portfolio approaches

A) 1.
B) 0.
C) infinity.
D) (n −1) × n.

Unsystematic Risk

The segment of risk that is unique to a specific company or industry, also known as diversifiable risk, which can be mitigated through diversification.

Diversification

Spreading a portfolio over many investments to avoid excessive exposure to any one source of risk.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.