risk cannot be eliminated even after a merger leading to a more diversified firm.Multiple choice question.SystematicUnsystematic

The correct answer is Systematic.

Here's why:

Risk in investments can be categorized into two types: Systematic and Unsystematic.

Systematic risk, also known as market risk, is inherent to the entire market or market segment. It affects the overall market and cannot be eliminated or reduced through diversification. It includes interest rate risk, inflation risk, currency risk, etc.

Unsystematic risk, on the other hand, is specific to a particular company or industry. It can be reduced or eliminated through diversification. It includes business risk, financial risk, etc.

In the context of your question, even after a merger leading to a more diversified firm, the risk cannot be eliminated. This is because the firm, despite being more diversified, is still subject to systematic risk that affects the entire market. Therefore, the correct answer is Systematic.