Which One of the Following Risks Is Irrelevant to a Well-Diversified

question 65

Multiple Choice

Which one of the following risks is irrelevant to a well-diversified investor?

• A)systematic risk
• B)unsystematic risk
• C)market risk
• D)nondiversifiable risk
• E)systematic portion of a surprise

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Definitions:

Available-For-Sale Securities

Financial assets that are neither held for trading purposes nor intended to be held to maturity, which can be sold in the short-term.

Trading Securities

Financial instruments bought and held primarily for selling them in the near term to profit from short-term price fluctuations.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Equity Method

An accounting technique used to record investments in associate companies, reflecting the investor’s share of the investee’s profit or loss.