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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 am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.