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Systematic risk in portfolio theory is also referred to as:
AMarket risk that cannot be diversified away
BIdiosyncratic risk
CDiversifiable risk
DFirm-specific risk independent of market
Answer & Solution
Correct answer: A. Market risk that cannot be diversified away
1. Identify what the question asks: this concept maps to systematicrisk (§4.1.1).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (A).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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