An example of diversifiable risk that should be ignored when analyzing project risk would include
A) Commodity price changes
B) Labor costs
C) Stock price fluctuations
D) Risk of government non-approval

Question

Quizplus · Accepted Answer

Stock price fluctuations are an example of diversifiable risk, meaning they can be mitigated or eliminated through diversification of investments. However, when analyzing project risk, only non-diversifiable risks should be considered, as these are the risks that cannot be eliminated through diversification and are inherent to the project itself. Therefore, commodity price changes, labor costs, and the risk of government non-approval are all examples of non-diversifiable risk that should be analyzed when assessing project risk.

An Example of Diversifiable Risk That Should Be Ignored When