Which one of the following is the best example of a risk associated with stock ownership?
A)The stock paid a regular quarterly dividend.
B)The firm's net income decreased by 4% for the quarter, as expected.
C)One of the firm's patent applications was unexpectedly rejected.
D)The firm's cost of debt increased as the result of an expected tax cut.
E)The firm's production costs increased in line with previous years.

Question

Quizplus · Accepted Answer

One of the risks associated with owning stock is that the company may face unexpected setbacks or negative news, such as the rejection of a patent application. This could potentially impact the company's future revenue and profitability, which could then affect the price of the stock. The other options provided do not necessarily pose a significant risk to the company's financial health or the value of the stock.

Which One of the Following Is the Best Example of a Risk