Economics Stock Market Questions
Diversifiable risk, also known as unsystematic risk or specific risk, refers to the portion of an investment's total risk that can be eliminated through diversification. It is the risk that is specific to a particular company or industry and can be reduced by spreading investments across different assets or sectors. Examples of diversifiable risks include company-specific events such as management changes, product recalls, or lawsuits, which may affect the performance of individual stocks but not the overall market.