What is the meaning of Diversifiable risk?
Diversifiable risk is the possibility that there will be a change in the price of a security because of the specific characteristics of that security. Diversification of an investor’s portfolio can be used to offset and therefore eliminate this type of risk.
Which of the following is another term for Diversifiable risk?
Unsystematic risk is the risk that is unique to a specific company or industry. It’s also known as nonsystematic risk, specific risk, diversifiable risk, or residual risk.
What is the definition of risk quizlet Edgenuity?
Risk. A measure of uncertainty about the future pay off to an investment accessed over sometime horizon and relative to a benchmark. Risk definition 2.
What is the definition of risk quizlet unit test?
Terms in this set (41) Risk. The chance of financial loss from perils to people or property. Insurance. A method of spreading individual risk among a large group of people to make losses more affordable for all. Peril.
Which kind of risk is Diversifiable?
unsystematic risk
Specific risk, or diversifiable risk, is the risk of losing an investment due to company or industry-specific hazard. Unlike systematic risk, an investor can only mitigate against unsystematic risk through diversification.
What does Diversifiable mean?
Capable of being diversified or varied
Filters. Capable of being diversified or varied. adjective.
What is Diversifiable risk and Nondiversifiable risk?
In this framework, the diversifiable risk is the risk that can be “washed out” by diversification and the nondiversifiable risk is the risk which cannot be diversified away. It appears to us that the decomposition of risk into its components is in some cases vague and in most cases imprecise.
What is a risk quizlet?
Risk (definition) The probability that an event will “occur”
What is the term risk?
Risk is the chance or probability that a person will be harmed or experience an adverse health effect if exposed to a hazard. It may also apply to situations with property or equipment loss, or harmful effects on the environment.
What type of risk is most likely to be insurable?
Pure risk is the only type of risk that is insurable because there is only the chance of loss. The Law of Large Numbers allows the probability of loss to become more predictable.
What are pure risks?
Pure risk refers to risks that are beyond human control and result in a loss or no loss with no possibility of financial gain. Fires, floods and other natural disasters are categorized as pure risk, as are unforeseen incidents, such as acts of terrorism or untimely deaths.
What type of risk is classified as Diversifiable risk?
Unsystematic risk (also called diversifiable risk) is risk that is specific to a company. This type of risk could include dramatic events such as a strike, a natural disaster such as a fire, or something as simple as slumping sales. Two common sources of unsystematic risk are business risk and financial risk.