In Chapter 11 we discussed diversifiable vs. non-diversifiable (i.e., "Systematic") risk.

A diversified portfolio reduces non-systematic (i.e., "diversifiable") risk.

But, what if I do not diversify, and therefore hold some portion of diversifiable risk that I have not reduced through diversification? I am taking more risk, and I need more return to compensate me for the additional risk.

But, will the marketplace compensate me for the additional risk I am taking? Will assets be priced such that I can comfortably take the additional risk and get paid for it?