Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 27 - Part IX - The Basic Tools of Finance - Quick Check Multiple Choice - Page 582: 5

Answer

c. firm-specific risk.

Work Step by Step

Firm-specific risk arises from companies that perform poorly within a portfolio. Diversification (the investment in a wide range of companies, especially across various sectors) decreases firm-specific risk.
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