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Basic Question 1 of 20
The portion of risk that can be eliminated by diversification is called ______.
B. market risk
C. default risk
A. unique risk
B. market risk
C. default risk
User Contributed Comments 11
| User | Comment |
|---|---|
| mtcfa | Shouldn't the answer be B? |
| danlan | Market risk is always there, unique risk can be eliminated. |
| Rotigga | Unique risk is the risk related to a specific asset. |
| ljamieson | Unique risk <=> Asset specific risk I assume |
| Crown01 | Unique risk = unsystematic risk also. |
| Crown01 | or we can can call unique risk as diversifiable risk |
| BigJimStud | think of it this way, how can you ever diversify away market risk when by the very nature of investing you are in the market to begin with? |
| thekobe | market risk= systematic risk unique risk = unsystematic risk |
| gulfa99 | unsystematic risk = unique risk systematic risk = non unique risk refer to notes |
| davcer | market=systematic=non unique=nos diversifiable |
| maryprz14 | You can't diversify away the system risk because by investing in the market, you are in the system. haha... sounds like a serious boring quote :D |
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Learning Outcome Statements
explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk;
explain return generating models (including the market model) and their uses;
calculate and interpret beta;
CFA® 2024 Level I Curriculum, Volume 5, Module 63.