Risks that affect only a single firm are called:
A) market risks.
B) specific risks.
C) systematic risks.
D) risk premiums.

Question

Quizplus · Accepted Answer

Specific risks are risks that affect only a single firm, such as management effectiveness, regulatory changes, and product failures. Market risks, on the other hand, affect the overall market and are unpredictable, such as changes in interest rates and economic downturns. Systematic risks are also market-wide risks, but they can be predicted and measured, such as inflation and political instability. Risk premiums are the extra return investors require for taking on riskier investments.

Risks That Affect Only a Single Firm Are Called