Question

What type of risk is reduced by increasing the number of stocks in a portfolio? Default...

  1. What type of risk is reduced by increasing the number of stocks in a portfolio?

    Default

    Inflation

    Systematic

    Unsystematic

Homework Answers

Answer #1

The answer is Unsystematic

Note:

The Unsystematic risk is the risk specific to a particular company or any particular market. If more stocks are added to any portfolio, the risk can be avoided by diversification.

Default risk is the risk that any company might not be able to meet its obligations.

Inflation risk is the risk that due to an inflation the inflows of the company would lose its value.

Systematic risk is the risk that cannot be diversified and affects one and all in the market.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Increasing the number of stocks in a portfolio would likely __________________. decrease the unsystematic risk of...
Increasing the number of stocks in a portfolio would likely __________________. decrease the unsystematic risk of the portfolio decrease the systematic risk of the portfolio increase the undiversifiable risk of the portfolio increase the diversifiable risk of the portfolio Group of answer choices I and IV only II only I only II and III only
The risk of a completely diversified portfolio ______________. Group of answer choices can be regarded as...
The risk of a completely diversified portfolio ______________. Group of answer choices can be regarded as the standard deviation of the market portfolio has only systematic risk and no unsystematic risk can be regarded as the variance of the market portfolio has only unsystematic risk and no systematic risk A portfolio of two perfectly _________ stocks has no diversification effect Group of answer choices uncorrelated positively correlated negatively correlated risk-free
1. Describe what happens to portfolio risk as more and more assets are added to portfolio?...
1. Describe what happens to portfolio risk as more and more assets are added to portfolio? 2. How does systematic risk differ from unsystematic risk? 3. Identify which of the following are unsystematic or systematic risks? a) Labor union at Caterpillar declared a strike b) Contrary to what was stated President was reelected.
As the number of securities in a portfolio increases (say, from 15 to 25 assets), much...
As the number of securities in a portfolio increases (say, from 15 to 25 assets), much of the ___________ risk of the portfolio is eliminated; the majority of the risk remaining in the portfolio is ____________ risk. systematic;        diversifiable total;                  unsystematic unsystematic;    market total;                  systematic
Explain why risk is reduced for a portfolio of many stocks. How does diversification work in...
Explain why risk is reduced for a portfolio of many stocks. How does diversification work in practice?
1. Which term has a different meaning than the others? Diversifiable risk Unsystematic risk Market risk...
1. Which term has a different meaning than the others? Diversifiable risk Unsystematic risk Market risk Nonsystematic risk Firm-specific risk 2. Systematic risk is also called _____. Check all that apply: market risk non-diversifiable risk common risk fundamental risk 3. Nonsystematic risk is also called _____. Check all that apply: random risk unsystematic risk firm-specific risk diversifiable risk 4. Diversification is _____. It _____. the mixing of different assets within a portfolio; reduces overall portfolio risk buying more than three...
if you build a large enough portfolio, you can diversify away all ________ risk, but you...
if you build a large enough portfolio, you can diversify away all ________ risk, but you will be left with ________ risk. A) diversifiable, unsystematic B) unsystematic, systematic C) systematic, undiversifiable D) undiversifiable, diversifiable
What is unsystematic risk? What portfolio minimises unsystematic risk and why?
What is unsystematic risk? What portfolio minimises unsystematic risk and why?
When there are no taxes and no bankruptcy costs, by increasing the debt-equity ratio of a...
When there are no taxes and no bankruptcy costs, by increasing the debt-equity ratio of a firm you are: a)   increasing the riskiness that is borne by its equity holders and therefore you are reducing the firm’s value b) decreasing the riskiness that is borne by its equity holders and therefore you are decreasing the firm’s value c)   increasing the riskiness that is borne by its equity holders and therefore you are increasing the firm’s value d) decreasing the riskiness...
Portfolio diversification eliminates Select one: a. systematic risk b. the market risk premium. c. All of...
Portfolio diversification eliminates Select one: a. systematic risk b. the market risk premium. c. All of these statements are true. d. unsystematic risk e. all investment risk.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT