Changes in general economic conditions usually produce:

Question

Quizplus · Accepted Answer

General economic conditions affect the overall market and all investments within it, leading to systematic risk. This type of risk cannot be diversified away since it affects the entire market. Idiosyncratic risk, on the other hand, is specific to individual companies or industries and can be diversified away. Risk reduction is a general term and does not accurately describe the specific effects of changes in economic conditions. Lower risk premiums may or may not result, depending on the specific market and circumstances.

Changes in General Economic Conditions Usually Produce