As securities are added to a portfolio, the unsystematic risks of the individual securities offset each other.

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As securities are added to a portfolio, the unsystematic risks of the individual securities offset each other. A fully diversified portfolio has no unsystematic risk but still has systematic risk.

This result indicates that diversification can eliminate some, but not all, of the risk of individual securities. LO.1

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Corporate Finance

ISBN: 9780073105901

8th Edition

Authors: Jeffrey Jaffe, Bradford D Jordan

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Question Posted: Jul 31, 2024 11:01 AM

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As securities are added to a portfolio, the unsystematic risks of the individual securities offset each other.

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Corporate Finance

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