Which one of the following is the best example of a diversifiable risk?
A) Interest rates increase
B) Energy costs increase
C) Core inflation increases
D) A firm's sales decrease
E) Taxes decrease

Question

Quizplus · Accepted Answer

A firm's sales decreasing is an example of a diversifiable risk because it only affects that specific firm and not the overall market or economy. The other options are examples of systematic risks, which affect the entire market or economy and cannot be diversified away.

Which One of the Following Is the Best Example of a Diversifiable