Asked by sophia dudich on May 07, 2024
Verified
The unsystematic risk of a specific security
A) is likely to be higher in an increasing market.
B) results from factors unique to the firm.
C) depends on market volatility.
D) cannot be diversified away.
Unsystematic Risk
The risk associated with a specific issuer or a particular industry sector, unlike systemic risk, which impacts the entire market.
Increasing Market
A market trend characterized by rising stock prices and generally optimistic investor sentiment, often associated with economic growth.
- Acquire knowledge about the nature of systematic and unsystematic risk and how they affect the management of investment portfolios.
Verified Answer
CY
Courtney YoungMay 13, 2024
Final Answer :
B
Explanation :
Unsystematic risk, also known as specific risk, is unique to a particular company or industry and can be reduced through diversification. It does not depend on overall market movements but rather on factors such as a company's management decisions, financial health, and industry trends.
Learning Objectives
- Acquire knowledge about the nature of systematic and unsystematic risk and how they affect the management of investment portfolios.