Changes in the general economy,like changes in interest rates or tax laws,represent what type of risk?
A) company-unique risk
B) market risk
C) unsystematic risk
D) diversifiable risk

Question

Quizplus · Accepted Answer

Changes in the general economy, such as interest rates or tax laws, affect the entire market rather than just one specific company, making it a market risk. This type of risk cannot be diversified away and affects all investors in the market. Therefore, Option B is the correct answer. Option A refers to risks specific to a company, Option C refers to unsystematic risks that can be diversified away, and Option D refers to risks that can be reduced through diversification.

Changes in the General Economy,like Changes in Interest Rates or Tax