If company A,a medical research company,makes a new product discovery and their stock rises 5%,this will have:
A) no effect on Company B's, a newspaper, stock price because it is a systematic risk element.
B) no effect on Company B's, a newspaper, stock price because it is an unsystematic risk element.
C) a large effect on Company B's, a newspaper, stock price because it is a systematic risk element.
D) a large effect on Company B's, a newspaper, stock price because it is an unsystematic risk element.
E) None of these.

Question

Quizplus · Accepted Answer

The discovery made by Company A is specific to the medical research industry and does not directly affect Company B's business in the newspaper industry. Therefore, it is an unsystematic risk element and will not have any significant impact on Company B's stock price.

If Company A,a Medical Research Company,makes a New Product Discovery