You are considering buying some stock in Continental Grain.Which of the following are examples of non-diversifiable risks?
I.Risk resulting from a general decline in the stock market.
II.Risk resulting from a possible increase in income taxes.
III.Risk resulting from an explosion in a grain elevator owned by Continental.
IV.Risk resulting from a pending lawsuit against Continental.
A) I and II
B) III and IV
C) I only
D) II, III, and IV

Question

Quizplus · Accepted Answer

Non-diversifiable risks, also known as systematic or market risks, affect the entire market or a large segment of it. Examples include general declines in the stock market and changes in income taxes. Risks specific to a company, like an explosion in a grain elevator or a lawsuit, are considered diversifiable risks because they can be mitigated through diversification.

You Are Considering Buying Some Stock in Continental Grain