The Major Difference Between Firm-Specific Credit Risk and Systematic Credit

Multiple Choice

The major difference between firm-specific credit risk and systematic credit risk is that:

A) FIs can diversify systematic credit risk, while firm-specific credit risk cannot be diversified.
B) FIs can diversify firm-specific credit risk, while systematic credit risk cannot be diversified.
C) None of the listed options are correct, as FIs can diversify both types of credit risk.
D) None of the listed options are correct, as FIs cannot diversify either type of credit risk.