Asked by James Stupin on Jun 26, 2024
Verified
Which of the following is not an example of a source of systematic or market risk?
A) Interest rate changes
B) Foreign competition with an industry's products
C) Changes in the overall economic outlook
D) Changes in the inflation rate
Systematic Risk
The inherent risk associated with the entire market or market segment, also known as market risk, which cannot be diversified away.
Market Risk
The risk of losses in investments caused by factors affecting the overall performance of the financial markets, also known as systematic risk.
Economic Outlook
An analysis or forecast of the future economic condition, including expectations for growth, inflation, and employment.
- Identify sources of systematic risk and their impact on investment decisions.
Verified Answer
EF
Erick FigueroaJun 27, 2024
Final Answer :
B
Explanation :
Foreign competition affecting an industry's products is an example of specific, unsystematic risk rather than market risk. Systematic or market risk factors affect the overall economy and all industries, whereas unsystematic factors are specific to individual companies or industries.
Learning Objectives
- Identify sources of systematic risk and their impact on investment decisions.