Which one of the following is the best example of a diversifiable risk? A) Energy costs...
Which one of the following is the best example of a diversifiable risk?
A) Energy costs increase.
B) Core inflation increases.
C) A firm's sales decrease.
D) Interest rates increase.
E) Taxes decrease.
Homework Answers
Answer : C) A firm's sales decrease.
Diversifiable risk is the possibility that there will be change in the price of security because of the specific characteristics of that security. It is the risk that issuer of the security will experience a loss of sales due to product recall which will decline stock price.
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