If company A makes a new product discovery and their stock rises 5% this will have:
A) no effect on Company B's stock price because it is a systematic risk element.
B) no effect on Company B's stock price because it is an unsystematic risk element.
C) a large effect on Company B's stock price because it is a systematic risk element.
D) a large effect on Company B's stock price because it is an unsystematic risk element.

Question

Quizplus · Accepted Answer

Unsystematic risk is specific to a single company or industry. Therefore, a new product discovery by Company A would be considered an unsystematic risk and would not typically affect the stock price of a different company, Company B, unless they are directly related in the same industry or supply chain.

If Company a Makes a New Product Discovery and Their