Which one of the following is an example of a systematic risk?
a well-respected chairman of the Federal Reserve suddenly resigns
a well-respected president of a firm dies unexpectedly in an accident
a well-managed firm reduces its work force and automates several job categories
a poorly managed firm suddenly goes out of business due to lack of sales
a key employee of a firm suddenly resigns and accepts employment with a key competitor
Systematic risk is the one that not only affects the company but also the economy or industry as a whole. Systematic risk will have an effect on the entire sector or the economy. The following is an example of a systematic risk-
A well respected chairman of the Federal Reserve suddenly resigns.
This decision of the chairman will not only affect the Federal Reserve but the entire economy as it plays a crucial part in it.
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