Ch.10 · Benchmarks and Performance Evaluation · easy
What is 'unsystematic risk' (also called specific risk or diversifiable risk)?
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EXPLANATION
Unsystematic risk is company-specific or sector-specific risk — e.g., a fraud at one company, a regulatory change affecting one sector, or a product recall. Unlike systematic risk, unsystematic risk can be significantly reduced by holding a diversified portfolio of stocks across multiple sectors and companies.
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