Question

In: Finance

Which of the following is true? A. A stock’s systematic risk can be diversified away by...

Which of the following is true? A. A stock’s systematic risk can be diversified away by adding it to a portfolio. B. Investors should not be compensated for bearing nondiversifiable risk. C. Beta is a measure of the nonsystematic risk of an asset. D. None of the answers are correct.

Solutions

Expert Solution

Option A.

Stock's systematic risk is a diversifiable risk. It is a type of risk that comes with the industry you invest in. It can be managed by ensuring that the portfolio is diversified with wide variety of asset classes.


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