Question
Which of the following statement is correct: 1.A
company's earnings being negatively affected by a strike by its workers or a major lawsuit against the company is an example of systematic risk. 2.A company that relies heavily on a single supplier for raw materials is an example of unsystematic risk. 3.A company that has significant debt obligations. If the company experiences financial distress or default, the value of its debt securities may decline, and the company may be forced to declare bankruptcy this is an example of systematic risk. 4.Global economic recession or a financial crisis, which can lead to a general decline in the stock market, reduced consumer spending is an example of systematic risk. 5.When interest rates rise, the cost of borrowing increases, which can lead to decreased consumer spending and reduced economic activity is an example of unsystematic risk.Solution
Unsystematic risk, also known as company-specific risk, is the risk that is inherent in a particular company or industry, and is not related to the overall market or economy. It can be reduced through diversification of investments. A company that relies heavily on a single supplier for raw materials is exposed to unsystematic risk. If that supplier experiences a disruption in its operations, such as a natural disaster or bankruptcy, the company may not be able to obtain the necessary materials to manufacture its products, resulting in a loss of revenue and profitability. This risk is specific to the company and is not related to the overall market or economy. Global economic recession or a financial crisis, which can lead to a general decline in the stock market, reduced consumer spending, and decreased economic activity. These events are beyond the control of individual investors and affect all investments, regardless of their specific characteristics this is an example of systematic risk.
Select the most appropriate word to fill in the blank.
He obtained 80% marks in Science in High School. He has qualified_______the science str...
The marathon runner's determination and rigorous training regimen allowed him to ___________ his own record, setting a new standard of excellence in the...
- Given below is a sentence with one blank. Below the sentence are given four words among which one word might fill the blank. If none of the words fill the ...
My father had neither much formal education nor _________ wealth.
Fill in the blank/s with suitable Word/s:
The committee will _________ the proposal at the next meeting.
Select the correctly spelt word to fill in the blank.
The ________________ of the worksheets is not an easy job.
To ………… 156th birth anniversary of Rabindranath Tagore, the singer ………. the audience with her ………. performance at the Au...
In the current global atmosphere of “success at any cost”, cheating is indelibly _______________to achieving goals through an easy and quick route.<...
In the question given below, one word has been omitted. Choose the most appropriate word from the given options that can fill the blank and make the se...
They filed case against the criminal but no one was ready to show up as a ___________.
Relevant for Exams:
