That part of a security's risk associated with random outcomes generated by events or behaviors, specific to the firm is also known as the _____.
A) nondiversifiable risk
B) unsystematic risk
C) market risk
D) systematic risk
E) relevant risk

Question

Quizplus · Accepted Answer

Unsystematic risk, also known as specific risk, pertains to the random events or behaviors that affect a particular company or industry. Examples include changes in management, product recalls, and labor strikes. Nondiversifiable risk or systematic risk, on the other hand, affects the entire market or economy, such as inflation or recession. Market risk, on the other hand, is the overall risk associated with a particular market or sector. Relevant risk is not a commonly used term in finance.

That Part of a Security's Risk Associated with Random Outcomes