SIE practice questioneasySystematic vs unsystematic risk
Which risk cannot be eliminated through diversification?
- AInflation risk
- BUnsystematic risk
- CSystematic risk✓ Correct answer
- DBusiness risk
Explanation
Why C — Systematic risk
Systematic risk affects the entire market and cannot be diversified away. The others either can be diversified (unsystematic, business) or are a type of systematic risk (inflation).
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