Knowledge Tree
diversifiable risk
Also known as: diversifiable risks, non-systematic risk, unsystematic risk
Facts (8)
Sources
Chapter 8 – Risk and Return – Fundamentals of Finance pressbooks.pub 4 facts
claimFirm-specific or idiosyncratic risks are unique to a particular company or industry, can often be reduced through diversification, and are referred to as diversifiable risks.
claimPortfolio management risk is categorized into three types: firm-specific (diversifiable) risk, market (non-diversifiable) risk, and total risk.
claimFirm-specific risk, also known as diversifiable or idiosyncratic risk, is associated with events or factors that affect only one company or a specific industry and do not impact the entire market.
claimTotal risk in an investment consists of both diversifiable risk and non-diversifiable risk.
Topic 2: The Risk and Return Trade Off in Financial Decision Making oercollective.caul.edu.au 5 days ago 4 facts
claimDiversifiable risk, also known as non-systematic risk, is the type of risk that can be reduced by combining assets in a portfolio.
claimUnsystematic risk, also known as diversifiable risk, is specific to individual assets, companies, or industries and can be mitigated by holding a diversified portfolio; examples include company management decisions or industry-specific challenges.
claimEfficient portfolio management focuses on minimizing diversifiable risk while accepting and managing systematic risk, as systematic risk drives expected return.
claimDiversifiable risk, also known as unsystematic risk, is risk specific to a particular company, industry, or asset, such as management decisions, product recalls, or competitive pressures, and can be reduced or eliminated through diversification.