Idiosyncratic Risk The risk that is specific to one particular investment The ri

Question

Idiosyncratic Risk The risk that is specific to one particular investment The risk that can be eliminated by proper diversification. The risk of a security that is associated with random events. Ail of the above. None of the above. QUESTION 4 Systematic Risk The risk that remains in a portfolio after diversification has eliminated all of the company-specific risk. None of these. This is also called diversifiable risk. The risk of a security that is associated with random events. The risk of a fire in a factory is an example of this type of risk. Click Save and Submit to save and submit. Click Save All Answers to save all answers Save All Ar

Explanation / Answer

1. Idiosyncratic risk - Is firm specific, can be diversified.

Option 4 - All of the above

2. Systematic risk - It is non-diversifiable, it is not firm specific, it is market risk

Option 1 - It is the risk that still remains after diversification has eliminated all the company specific risk.

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