Final answer:
The generally regarded minimum number of stock holdings in an equity portfolio at which point non-systematic risk is eliminated is around 20 to 30 stocks.
Step-by-step explanation:
The generally regarded minimum number of stock holdings in an equity portfolio at which point non-systematic risk is eliminated is around 20 to 30 stocks. Non-systematic risk, also known as specific risk or diversifiable risk, refers to the risk that is unique to a particular stock or company.
By holding a diversified portfolio of stocks, investors can mitigate the impact of any one stock or company on their overall portfolio performance. Diversification helps to spread the risk across different stocks and sectors, reducing the potential impact of any individual stock's performance.
For example, if an investor holds only a few stocks in their portfolio, the failure of one of those stocks could have a significant negative impact on the overall portfolio. However, as the number of stocks in the portfolio increases, the impact of any individual stock's performance becomes less significant.