Which one of the following is an example of systematic risk?
A)The price of lumber declines sharply.
B)Airline pilots go on strike.
C)The European Central Bank increases interest rates.
D)A hurricane hits a tourist destination.
E)People become diet conscious and avoid fast food restaurants.

Question

Quizplus · Accepted Answer

Systematic risk refers to the risk that affects the entire market or a particular segment of the market. The decision by the European Central Bank to increase interest rates would affect the entire market, making it a prime example of systematic risk. The other options either relate to specific companies or industries (lumber, airlines, and fast food restaurants) or specific locations (a tourist destination), making them examples of unsystematic or idiosyncratic risks.

Which One of the Following Is an Example of Systematic