Which of the following is considered a systematic risk?
A) Tahoe, Inc. fires its CEO for embezzlement.
B) The government announces inflation was higher than expected in the most recent quarter.
C) Bio-Norm announces a new drug to treat arthritis.
D) A company's sales decline for the seventh consecutive quarter.
E) A major lawsuit is announced against Kolby Corp.

Question

Quizplus · Accepted Answer

Systematic risk refers to risks that affect the entire market or a specific segment of the market. In this case, the announcement of higher than expected inflation in the most recent quarter is a macroeconomic factor that affects the entire market or a specific segment of the market, thus making it a systematic risk. The other choices are specific to individual companies and do not affect the market as a whole, making them unsystematic risks.

Which of the Following Is Considered a Systematic Risk