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True or False: In general, systematic (market) risk is diversifiable.
a) True
b) False

asked
User Mhoareau
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1 Answer

5 votes

Final answer:

Systematic risk is not diversifiable as it applies to the entire market or market segment, and affects all investments, in contrast to unsystematic risk which is specific and can be mitigated through diversification.

Step-by-step explanation:

The statement "In general, systematic (market) risk is diversifiable" is false. Systematic risk, also known as market risk, refers to the risk inherent to the entire market or market segment. This type of risk is linked to factors that affect the performance of the entire market, such as economic downturns, political events, or natural disasters. Unlike unsystematic risk, which is specific to a particular company or industry and can be mitigated through diversification, systematic risk affects all investments and cannot be eliminated simply by diversifying a portfolio.

answered
User Georgij
by
8.8k points
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