Question

Recession, inflation, and high interest rates are economic events that are best characterized as being a. systematic risk factors that can be diversified away. b. among the factors that are responsible for market risk. c. irrelevant except to governmental authorities like the Federal Reserve. d. company-specific risk factors that can be diversified away. e. risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers.

Answer 1

Answer:

The correct answer is letter "B": among the factors that are responsible for market risk.

Explanation:

Market risk is the threat of an investment value falling due to factors that affect all market-wide investments. Investors always take on a certain level of risk. There is always the risk that their investments do not achieve expected returns. The risk falls into two categories: Systematic risk and Unsystematic Risk.

Interest rates fluctuations, recession, and inflation are considered market risks.