Asked by Jamie Flexer on Apr 25, 2024
Why are some risks diversifiable and some non-diversifiable? Give an example of each.
Diversifiable Risk
Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.
Non-Diversifiable Risk
A type of investment risk that cannot be eliminated through diversification, arising from factors that affect all companies.
- Understand the meanings and distinctions of systematic versus unsystematic risk.
Learning Objectives
- Understand the meanings and distinctions of systematic versus unsystematic risk.