Both public and private firms are subject to non-diversifiable risk.

Question

Quizplus · Accepted Answer

Non-diversifiable risk, also known as systematic or market risk, is the type of risk that is beyond the control of individual firms and affects the overall market. It includes factors such as changes in interest rates, inflation, political instability, and natural disasters. Therefore, both public and private firms are subject to non-diversifiable risk as they operate in the same market and are exposed to the same macroeconomic factors.

Both Public and Private Firms Are Subject to Non-Diversifiable Risk