Which of the following statements about the various types of risks is true?

Question

Quizplus · Accepted Answer

Inflation risk is a systematic risk, meaning it affects the entire market and cannot be diversified away. Default risk is diversifiable to some extent, as it can be minimized by investing in a diversified portfolio of bonds. Interest rate risk is a systematic risk, as changes in interest rates affect the entire market. Maturity risk is a type of interest rate risk and hence a systematic risk. Political risk can be either diversifiable or systematic, depending on the specific situation.

Which of the Following Statements About the Various Types of Risks