Ch.2 · Mutual Fund Structure Basics · medium
What is the difference between 'unsystematic risk' and 'systematic risk' in the context of mutual fund investing?
0% of students got this wrong
EXPLANATION
Unsystematic (specific) risk is company or sector-specific — e.g., a company's management fraud or sector downturn. This can be reduced through diversification. Systematic (market) risk affects all investments — e.g., recession, inflation, interest rate changes. Diversification cannot eliminate systematic risk.
Practising Chapter 2 one question at a time?
Try the full chapter — 100 questions, tracked score, weak area breakdown.