Final answer:
The statement is true: unsystematic risk can be virtually eliminated through a well-diversified portfolio as it reduces the impact of risks specific to a company or industry.
Step-by-step explanation:
The statement that an investor can eliminate virtually all unsystematic risk by holding a very large and well-diversified portfolio of stocks is true. Unsystematic risk, also known as idiosyncratic or specific risk, pertains to factors that affect a specific company or industry. By diversifying a portfolio across various sectors and companies, an investor can reduce the impact of these risks. In contrast, systematic risk, which affects the entire market or economy, cannot be diversified away. This is the basis for the modern portfolio theory, which suggests that an investor can achieve an optimal portfolio by diversifying the components of their investments.