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The Two Categories of Bases Are

question 27

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The two categories of bases are:


Definitions:

Variability of Returns

The extent of fluctuation in the returns on an investment over a certain period of time, often used as a measure of investment risk.

Business-specific Risk

This is the risk associated with the unique factors impacting a specific company or industry, excluding broader market or economic risks.

Unsystematic Risk

The risk associated with a particular company or industry, which can be mitigated through diversification.

Diversification

The strategy of spreading investments among various financial assets to reduce risk.

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