Fixed Income

Diversifiable Risk

Diversification is a crucial strategy in managing risk in finance. When an asset is combined with others in a well-diversified portfolio, certain risks can be eliminated. Such risks, known as unsystematic risks, are specific to individual assets and can be mitigated by spreading investments across different assets. This reduces the overall risk of the portfolio, making it less vulnerable to market fluctuations. Therefore, diversification is essential for a well-rounded and secure investment portfolio.

Related terms

Coupon Interest Rate

Understand the meaning and definition of Coupon Interest Rate in the context of stock market, trading, and investments.

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Discount Bond

Understand the meaning and definition of Discount Bond in the context of stock market, trading, and investments.

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Option-Adjusted Spread

Understand the meaning and definition of Option-Adjusted Spread in the context of stock market, trading, and investments.

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High-Yield Bond

Understand the meaning and definition of High-Yield Bond in the context of stock market, trading, and investments.

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Bid-Ask Spread

Understand the meaning and definition of Bid-Ask Spread in the context of stock market, trading, and investments.

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Settlement Risk

Understand the meaning and definition of Settlement Risk in the context of stock market, trading, and investments.

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