Inflation,recession,and high interest rates are economic events that are best characterized as being
A) systematic risk factors that can be diversified away.
B) company-specific risk factors that can be diversified away.
C) among the factors that are responsible for market risk.
D) risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers.
E) irrelevant except to governmental authorities like the Federal Reserve.

Question

Quizplus · Accepted Answer

Inflation, recession, and high interest rates are macroeconomic factors that affect the overall market risk, and therefore should be considered by security analysts and portfolio managers. These factors cannot be diversified away as they affect the entire market, and are not specific to individual companies. They are also beyond the control of investors and are typically influenced by larger economic and political factors.

Inflation,recession,and High Interest Rates Are Economic Events That Are Best