Final answer:
Unsystematic risk, also known as diversifiable risk, refers to the risk that is inherent to a specific company or industry and can be mitigated through diversification.
Step-by-step explanation:
The correct answer is c. Unsystematic risk. Unsystematic risk, also known as diversifiable risk or specific risk, refers to the risk that is inherent to a specific company or industry and can be mitigated through diversification. It is the risk associated with factors that are specific to a particular investment and can be reduced by spreading investments across different assets.
Another term for diversifiable risk is unsystematic risk, which is specific to individual companies or industries and can be managed through diversification. It is distinct from market risk, which affects the whole market.
The term diversifiable risk is synonymous with unsystematic risk. This type of risk is associated with individual companies or industries and can be reduced or eliminated through diversification. For instance, investing in different sectors or companies allows an investor to mitigate the impact of risks that may affect a single company or industry. In contrast, market risk, also known as systematic risk, affects the entire market and cannot be diversified away. Macro risk is related to larger economic factors affecting all investments and is also a type of systematic risk, while beta is a measure of how much systematic risk a particular investment has relative to the market. Lastly, total risk encompasses both diversifiable and non-diversifiable risks.