Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 1 of 8
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 |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk
CFA® 2025 Level I Curriculum, Volume 2, Module 2.