Recession, inflation, and high interest rates are economic events that are best characterized as being
A) company-specific risk factors that can be diversified away.
B) among the factors that are responsible for market risk.
C) risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers.
D) irrelevant except to governmental authorities like the Federal Reserve.
E) systematic risk factors that can be diversified away.

Question

Quizplus · Accepted Answer

Recession, inflation, and high interest rates are macroeconomic events that affect the entire market, making them examples of market risk. These events cannot be diversified away by any single company or investor. Therefore, they should be considered by security analysts and portfolio managers when making investment decisions.

Recession, Inflation, and High Interest Rates Are Economic Events That