Even if the portfolio is well diversified, the investor is still exposed to Blank______ risk.Multiple choice question.systematicmeanmultipliedunknown

Step 1: Break Down the Problem

The question involves identifying the type of risk an investor is exposed to even when their portfolio is well diversified. The options provided are:

1. Systematic risk
2. Mean risk
3. Multiplicated risk
4. Unknown risk

Step 2: Relevant Concepts

• Systematic Risk: This type of risk is inherent to the entire market or market segment and cannot be eliminated through diversification. It includes factors such as economic downturns, political instability, or changes in interest rates.
• Mean Risk: This option does not typically describe a recognized risk type in finance.
• Multiplicated Risk: This is not a standard term used in investment risk analysis.
• Unknown Risk: This generally refers to unforeseen events that cannot be predicted.

Step 3: Analysis and Detail

Since the question specifically mentions that the portfolio is well diversified, it implies that diversifiable (or unsystematic) risks associated with individual assets have been mitigated. However, systematic risk remains present regardless of diversification efforts because it affects the entire market.

Step 4: Verify and Summarize

Given the definitions and characteristics of the risks, the correct answer to the question is systematic risk.

Final Answer

The investor is still exposed to systematic risk even if the portfolio is well diversified.