Question

Systematic risk Select one: a. is unique to a company or industry. b. describes the total risk of a stock or fund. c. All of these are true statements. d. is a risk that affects a large number of stocks. e. is also known diversifiable risk.

Answer 1

The correct answer is option d.

Systematic risk is a risk that affects a large number of stocks. It is also called market risk.

Example: Global pandemic, rise in interest rates, increase in corporate tax rate, etc.

Option a is incorrect because unsystematic risk is unique to a company or industry, not systematic risk

Option b is incorrect because standard deviation measures the total risk

Option e is incorrect because systematic risk cannot be diversified. Only unsystematic risk can be diversified

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