You are considering buying some shares in Harvey Norman Holdings.Which of the following is an example of nondiversifiable risk?
A)Risk resulting from a general decline in the retail market.
B)Risk resulting from a news release that some of Harvey's Norman's stock is defective
C)Risk resulting from an explosion in a goods lift owned by Harvey Norman
D)Risk resulting from an impending legal action against Harvey Norman

Question

Quizplus · Accepted Answer

Nondiversifiable risk, also known as systematic risk or market risk, is the risk that affects the overall market, such as a decline in the retail market as a whole. The other options are examples of diversifiable risk, also known as unsystematic risk, which can be mitigated through diversification, such as investing in multiple companies in different industries.

You Are Considering Buying Some Shares in Harvey Norman Holdings