Question 1
Exposure to systematic or market risk can be reduced by
◦ investing in a variety of economic sectors.
◦ adding low or negative beta stocks to the portfolio.
◦ diversifying internationally.
◦ cannot be reduced or avoided.
Question 2
In designing a portfolio, relevant risk is
◦ total risk.
◦ unsystematic risk.
◦ event risk.
◦ nondiversifiable risk.