Systematic Risk
Which statement about systematic risk is TRUE?
Systematic risk is measured by beta, which indicates a security volatility relative to the overall market. Systematic risk cannot be eliminated through diversification (that is unsystematic risk), affects all securities
Complete Analysis & Legal Rationale
Systematic risk is measured by beta, which indicates a security volatility relative to the overall market. Systematic risk cannot be eliminated through diversification (that is unsystematic risk), affects all securities including stocks, and is also called market risk (not business risk).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.