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    Question

    Which of the following risk can be diversified?

    A Systematic risk Correct Answer Incorrect Answer
    B Market risk Correct Answer Incorrect Answer
    C Unsystematic risk Correct Answer Incorrect Answer
    D All of the above Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Unsystematic risk is also known as specific risk or diversifiable risk. It is unique to a company or a particular industry. For example, strikes, lawsuits and such events that are specific to a company, and can to an extent be diversified away by other investments in the portfolio are unsystematic risk. Business risk, financial risks, operational risk are examples of diversifiable or unsystematic risks.             

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