SIE practice questionmediumBusiness risk
A manufacturer suffers from a product recall that leads to a loss in reputation and sales. Investors primarily face which risk?
- APrepayment risk
- BCredit risk
- CBusiness risk✓ Correct answer
- DMarket risk
Explanation
Why C — Business risk
Product recalls are company-specific, reflecting business risk. The other risks are broader or unrelated.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Risk & Portfolio Management questions
- A business’s excessive leverage causes it to miss interest payments. What risk does this best illustrate?
- A portfolio holds only pharmaceutical companies. If the sector faces regulatory scrutiny and declines, what risk is…
- Which risk remains even when a portfolio is well-diversified across sectors and asset classes?
- Which security is most likely to be affected by prepayment risk?
- An investor in callable bonds is concerned about not being able to reinvest principal at similar rates if bonds are…
- Why is call risk a disadvantage for investors in callable bonds?
- A real estate investment trust (REIT) holds properties in a market with few buyers. In a downturn, investors may be…
- A U.S. investor earns a positive return in Japanese equities, but due to a weakening yen, the investor experiences a…