Asked by Elisa Otero on May 07, 2024
Verified
Diversifiable risks can be essentially eliminated by investing in several unrelated securities.
Diversifiable Risks
The portion of investment risk that can be reduced or eliminated through diversification, such as risks specific to a particular company or industry.
Unrelated Securities
Investments in financial assets that do not share common risk factors, industries, or characteristics.
- Understand the principle of diversification and its effect on managing risk within investment portfolios.
- Comprehend the ability to control and alter portfolio risk through diversification into different securities, with an emphasis on international investments.
Verified Answer
YK
Yasmin KhaleelMay 12, 2024
Final Answer :
True
Explanation :
Diversifiable risks, also known as unsystematic risks, are specific to a company or industry and can be significantly reduced or eliminated by spreading investments across various sectors or assets, thereby creating a diversified portfolio.
Learning Objectives
- Understand the principle of diversification and its effect on managing risk within investment portfolios.
- Comprehend the ability to control and alter portfolio risk through diversification into different securities, with an emphasis on international investments.
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