Recession, inflation, and high interest rates are economic events that are best characterized as being
A) company-specific risk factors that can be diversified away.
B) among the factors that are responsible for market risk.
C) risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers.
D) irrelevant except to governmental authorities like the federal reserve.
E) systematic risk factors that can be diversified away.

Question

Quizplus · Accepted Answer

Recession, inflation, and high interest rates are macroeconomic factors that affect the overall market and cannot be diversified away by individual investors. As such, they fall under the category of market risk, a systematic risk factor that affects all securities in the market. Therefore, they are important considerations for security analysts and portfolio managers when making investment decisions.

Recession, Inflation, and High Interest Rates Are Economic Events That