Which of the following provides the best example of a systematic-risk event?
A) A strike by union workers hurts a firm's quarterly earnings.
B) Mad Cow disease in Montana hurts local ranchers and buyers of beef.
C) The Federal Reserve increases interest rates 50 basis points.
D) A senior executive at a firm embezzles $10 million and escapes to South America.

Question

Quizplus · Accepted Answer

The Federal Reserve increasing interest rates is an example of a systematic-risk event because it affects the entire economy and financial markets, not just one specific company or industry. Changes in interest rates can impact the cost of borrowing, investment decisions, and overall economic activity. The other options are examples of company-specific risks or non-systematic risks.

Which of the Following Provides the Best Example of a Systematic-Risk