Question

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

Answer 1

Answer:

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

Explanation:

Market risk is a chance that the value of an investment will decrease due to a factor that affects all investments across the market. Investors always assume there could be a certain level of risk. There is always a chance that their investments will not meet their expected returns.  

Examples of factors of market risk are changes in equity prices, fluctuations in the interest rate, changes in foreign exchange rates, inflation or a recession.