SIE Exam Question 33: Answer and Explanation

Question: 33

Unsystematic risk is also known as _________________.

• A. Market risk
• B. Purchasing power risk
• C. Credit risk
• D. Diversifiable risk

Correct Answer: D

Explanation:

Unsystematic risk is also known as diversifiable risk. It results from random events such as labor strikes or lawsuits and affects various investment vehicles differently. It is this type of risk that can be eliminated through diversification.