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The part of a security’s risk associated with economic factors that affect all firms to some...

The part of a security’s risk associated with economic factors that affect all firms to some extent is known as the . A. financial risk B. business risk C. market risk D. diversifiable risk E. unsystematic risk

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Answer #1

The correct answer is C. market risk

Note:

A. financial risk is the risk of taking debt. This is firm specific.

B. Business risk is the risk the failure of any business operations.This is firm specific.

C. Market risk is the risk relating to the factors outside the control of any firm and depends on the economic factors. These are not firm specific and affect all the business operating in any economy.

D. diversifiable risk is the risk that can be avoided by not investing in any particular stock.This is firm specific.

E. unsystematic risk is the diversifiable risk and is specific to a particular firm.

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