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Basic Question 2 of 8
Which of the following risks can virtually be eliminated if we spread our investment funds across a large number of risky assets?
B. Beta
C. Market
D. Systematic
E. Asset-specific
A. Non-diversifiable
B. Beta
C. Market
D. Systematic
E. Asset-specific
User Contributed Comments 10
| User | Comment |
|---|---|
| saltnvinegar | shouldnt it be Beta i.e unsystematic or diversifiable risk??? |
| myron | saltnvinegar: beta is the measure for systematic risk! asset-specific risk is diversifiable/unsystematic risk. |
| BigJimStud | beta = market risk asset-specific = unsystematic risk |
| reganbaha | BJS, beta does not equal market risk, market risk is a systematic risk. Beta is a measure of how an individual asset performs in relation to a broader market index |
| vinooka | beta = market risk = systematic risk = non-diversifiable risk |
| vinooka | asset-specific risk = unique risk = unsystmeatic risk |
| hoyleng | systematic risk cannot be diversified. unsystematic risk can be diversified / eliminated. |
| jonan203 | beta is not market risk, it is a measure or a portfolios correlation to market volatility. |
| Shaan23 | Do the people who ask these questions read the notes? |
| ascruggs92 | Beta is not market risk, it is an individual security's sensitivity to market risk. Therefore it still cannot be fully diversified away because it is based on market risk |
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® 2024 Level I Curriculum, Volume 2, Module 2.