alleryStart learning →The relevant risk for investors is described as the risk that is:
AOperational
BSystematic
CUnsystematic
DAccounting
Answer & Solution
Correct answer: B. Systematic
1. Only one kind of risk survives diversification.
2. Portfolio diversification protects against unsystematic risk.
3. The relevant risk for investors is the systematic risk they incur.
4. That is the risk beta is used to measure.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 15 'Risk, Return, and Capital Market Theory'_
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