It Is Important to Understand That Business-Specific (Unsystematic)risk Is Not

question 166

Multiple Choice

It is important to understand that business-specific (unsystematic) risk is not included in the capital asset pricing model, because beta measures only market (systematic) risk. The underlying assumption is that:

• A)we don't need to worry about business-specific risk in portfolios because it's diversified away.
• B)we can't measure business-specific risk so it's useless to worry about it.
• C)business-specific risk is usually small compared with market risk.
• D)All of the above

---

Definitions:

Collaborators

Individuals or entities working together on a joint project, contributing various skills or resources towards a common goal.

Collaboratively

In a manner involving two or more people working together towards a common goal or project.

Format

Refers to the arrangement, structure, or layout of digital or printed content, including its visual presentation and organization.

Virtual Meetings

Conferences or gatherings held over the internet using software platforms, where participants can interact without the need for physical presence.