SIE Exam Question 924: Answer and Explanation

Question: 924

__________ risk cannot be eliminated through diversification because it affects the entire market. __________ risk may be diversified away or avoided by not investing in securities that exhibit the risk.

  • A. Non-systematic, Unsystematic
  • B. Unsystematic, Systematic
  • C. Systematic, Unsystematic
  • D. Total, Systematic

Correct Answer: C

Explanation:

Systematic risk cannot be eliminated through diversification because it affects the entire market. Unsystematic risk may be diversified away or avoided by not investing in securities that exhibit the risk.

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