question archive Which of the following provides the best example of a systematic-risk event? A
Which of the following provides the best example of a systematic-risk event? A
Subject:BusinessPrice:2.88 Bought3
Which of the following provides the best example of a systematic-risk event?
A. A strike by union workers hurts a firm's quarterly earnings.
B. Mad Cow disease in Montana hurts local ranchers and buyers of beef.
C. The Federal Reserve increases interest rates 50 basis points.
D. A senior executive at a firm embezzles $10 million and escapes to South America.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
The answer is C. The Federal Reserve increases interest rates 50 basis points. This action will impact the entire economy and all asset classes. It is unavoidable, largely unpredictable, and non-diversifiable. These characteristics make it a systematic risk event.
All of the other answer choices are reflective of localized, unique events that qualify as non-systematic. The adverse impact associated with each even is diversifiable.
