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Exercise: Are you familiar with the word, "pursy?" Provide a definition. If the term is unfamiliar, make a guess about its meaning based on its appearance or sound, and create your own definition. Then look the word up, and find out how close you got. (We provide a thumbnail meaning as answer.)
Efficient Frontier
A graphical representation in modern portfolio theory showing the set of optimal portfolios that offer the highest expected return for a defined level of risk or vice versa.
Firm-specific Risk
The risk associated with an individual company, distinct from market risk, that can affect the company's stock price.
Diversifiable Risk
The portion of investment risk that can be reduced or eliminated through diversification in an investment portfolio.
Unique Risk
Another term for diversifiable risk, emphasizing the idea that this risk is specific to an individual investment and not the market as a whole.
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