The stock price of a gold-mining firm drops when it is discovered the firm's chairman has overstated minable gold reserves. This is an example of a (n) ______________ risk factor.
A) Systematic.
B) Non-diversifiable.
C) Unsystematic.
D) Market.
E) Anticipated.

Question

Quizplus · Accepted Answer

This is an example of unsystematic risk, which refers to the risk associated with a specific company or industry. In this case, the risk is specific to the gold-mining firm due to the actions of its chairman, and it can be mitigated through diversification.

The Stock Price of a Gold-Mining Firm Drops When It