Which Risk Can Be Partially or Fully Diversified Away as Additional

question 26

Multiple Choice

Which risk can be partially or fully diversified away as additional securities are added to a portfolio?
I. Total risk
II. Systematic risk
III. Firm-specific risk

• A) I only
• B) I and II only
• C) I, II, and III
• D) I and III

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Definitions:

Situational Influences

External factors that can affect an individual's behavior and decisions in a given context, such as social norms and environmental cues.

Self-Serving Bias

Self-serving bias is the common human tendency to attribute positive events to one's own character but attribute negative events to external factors, thereby protecting self-esteem.

Personal Credit

The ability of an individual to borrow money or access goods or services with the understanding that payment will be made in the future.

Good Actions

Behaviors or deeds that are considered morally right, beneficial, or of positive impact to others.