A decrease in a ﬁrm's cost of borrowing is an example of systematic risk.

Question

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A decrease in a firm's cost of borrowing is not an example of systematic risk. Systematic risk refers to factors that affect the overall market or economy, such as inflation or geopolitical events. A decrease in a firm's borrowing cost is more related to its specific circumstances and financial health, and would be considered an example of unsystematic or company-specific risk.

A Decrease in a ﬁRm's Cost of Borrowing Is an Example