What risk type is prevalent regardless of the level of portfolio diversification or hedging?
A.
Market
B.
Default
C.
Unique
D.
Inflation
The Answer Is:
A
This question includes an explanation.
Explanation:
Market risk (systematic risk) cannot be eliminated by diversification or hedging; it affects all securities in the market (e.g., recessions, geopolitical events, interest rate changes).
Default risk (B) relates to specific issuers of debt.
Unique risk (C) is company-specific and can be diversified away.
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