Final answer:
NSPT is an approach in investment portfolios that aims to eliminate systemic risk factors. It can be done through diversification, risk management tools, and reducing exposure to specific risks.
Step-by-step explanation:
NSPT stands for Non-Systematic Portfolio Theory, a risk management approach that aims to eliminate systemic risk factors in investment portfolios.
While it is difficult to completely remove all systemic risk factors, NSPT employs diversification and other strategies to minimize their impact. For example, an investor can diversify their portfolio across different industry sectors, geographic regions, and asset classes, reducing the exposure to specific risks tied to a single industry or region.
Additionally, NSPT may incorporate risk management tools such as stop-loss orders, which automatically sell a security if its price drops below a certain level, reducing potential losses and exposure to systemic risks.