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 stocks; reduces overall portfolio risk

buying more than three stocks; increases the expected return

the mixing of different assets within a portfolio; increases the expected return

5. Diversification can eliminate _____ risk.

unsystematic or specific

systematic or market

no

all