If You Build a Large Enough Portfolio, You Can Diversify

question 78

Multiple Choice

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

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

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Definitions:

Price Ceilings

A government-imposed limit on the price charged for a product to prevent prices from rising to a certain level above equilibrium.

Price Floors

Government or regulatory-set minimum prices for goods or services, aimed at preventing prices from falling too low.

Price

The cost involved in purchasing a specific good or service.

Shortage

A situation where the demand for a product exceeds its supply, often leading to higher prices.