If You Build a Large Enough Portfolio, You Can Diversify

question 94

Multiple Choice

If you build a large enough portfolio, you can diversify away all ________ risk, but you will be left with ________ risk.

• A) diversifiable, unsystematic
• B) unsystematic, systematic
• C) systematic, undiversifiable
• D) undiversifiable, diversifiable

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Definitions:

Nonrenewable Natural Resources

Natural resources such as fossil fuels and minerals that do not replenish on a human time scale and hence are finite.

Fixed Supply

A situation where the quantity of a good or resource available does not change in response to its price.

Fish

Aquatic animals that are typically harvested either from the wild (fishing) or from farms (aquaculture) for food, recreational, or commercial purposes.

Open Ocean

The vast, deep, and relatively unexplored parts of the sea, far from land and typically beyond national jurisdiction.