One example of a nondiversifiable risk is the sudden:
A)resignation of a well-respected president of a firm.
B)passing of a well-respected Federal Reserve Bank chairman.
C)resignation of a key employee of a major manufacturer.
D)replacement of a firm's workforce with robots.
E)closing of a business due to a lack of sales.

Question

Quizplus · Accepted Answer

The passing of a well-respected Federal Reserve Bank chairman is a nondiversifiable risk because it affects the entire market and cannot be hedged against. It is not specific to one company or industry and therefore cannot be diversified away through a portfolio.

One Example of a Nondiversifiable Risk Is the Sudden