Home › US CMA Part 2 › Finance › Risk and Return › Which of these is given as an example of unsyste…
Which of these is given as an example of unsystematic risk?
AA general market crash
BA rise in all interest rates
CA product liability lawsuit
DA nationwide recession
Answer & Solution
Correct answer: C. A product liability lawsuit
1. Unsystematic risk is specific to one company.
2. Systematic risk affects the whole market.
3. Examples of unsystematic risk include a company facing a product liability lawsuit.
4. Inventing a new product is another example given.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 15 'Risk, Return, and Capital Market Theory'_
Related questions
An investor holding one stock rather than many is most exposed to which avoidable risk?Under CAPM, an asset with higher systematic risk should offer an expected return that is:Beta is relevant to investors because it measures the risk that is:A market-wide crash affecting nearly every stock is best classified as:A single company's accounting scandal is a risk that diversification can:A correlation coefficient is described as showing how two variables move:The relevant risk for investors is described as the risk that is:CAPM rests on the idea that investors holding stocks with higher systematic risk should be