Unique Risk - Non-Systematic Risk Quiz
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Questions and Answers

What type of risk affects the entire market or a broad segment of it?

  • Inflation risk
  • Interest rate risk
  • Unique risk
  • Market risk (correct)
  • How does high inflation impact companies?

  • Increases profit margins
  • Boosts consumer spending
  • Decreases stock prices (correct)
  • Lowers borrowing costs
  • Which factor can slow down economic growth due to higher borrowing costs?

  • Stable profit margins
  • Low inflation
  • High-interest rates (correct)
  • Increased consumer spending
  • What is the primary reason why diversification can help mitigate unique risk?

    <p>Spreads investments across different assets</p> Signup and view all the answers

    Which type of risk is related to factors beyond individual companies' control?

    <p>Market risk</p> Signup and view all the answers

    How does high-interest rates impact consumer spending?

    <p>Lowers consumer spending</p> Signup and view all the answers

    Which type of risk affects individual companies or assets and cannot be easily diversified away?

    <p>Unique risk</p> Signup and view all the answers

    How could lawsuits against a pharmaceutical company affect its stock price?

    <p>Cause the stock price to drop due to legal costs</p> Signup and view all the answers

    What effect can a strike by workers at an automobile manufacturer have on the company's profitability?

    <p>Decrease profitability by disrupting production</p> Signup and view all the answers

    How could winning a major government contract impact a technology company's stock price?

    <p>Boost revenue and stock price</p> Signup and view all the answers

    What is one way in which a successful advertising campaign by a retail company can affect its stock price?

    <p>Drive up sales and increase investor confidence</p> Signup and view all the answers

    Why is Unique risk also referred to as Non-Systematic Risk?

    <p>Because it affects individual companies and assets</p> Signup and view all the answers

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