Certified Management Accountant Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

In portfolio management, the primary goal in relation to unsystematic risk is to minimize it through diversification. Unsystematic risk refers to the risk that is unique to a specific company or industry, such as operational or management issues. By diversifying investments across a range of assets, sectors, or geographies, an investor can spread out risk and reduce the impact that any one investment might have on the overall portfolio. This strategy helps to ensure that negative performance from one asset does not disproportionately affect the overall portfolio, allowing for more stable returns.

In contrast, maximizing overall market exposure does not specifically address unsystematic risk, and while predicting market movements can be beneficial for timing investments, it does not directly relate to the minimization of unsystematic risk. Furthermore, eliminating all types of risk is not feasible, as every investment carries some level of risk; the key is to manage and minimize the specific risks that can be mitigated, such as unsystematic risk through diversification.