Which one of the following is an example of unsystematic risk?
A) The inﬂation rate increases unexpectedly.
B) The federal government lowers income taxes.
C) An oil tanker runs aground and spills its cargo.
D) Interest rates decline by one-half of one percent.
E) The GDP rises by 2% more than anticipated.

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific risk or diversifiable risk, pertains to risks that can be mitigated by diversifying one's investments. An oil tanker running aground and spilling its cargo is an example of unsystematic risk as it only affects the specific company or industry involved and not the overall market. The other options listed are examples of systematic risk, which affects the overall market and cannot be diversified away.

Which One of the Following Is an Example of Unsystematic