SIE practice questionmediumConcentration risk
A mutual fund that invests only in technology startups is exposed to high:
- AInterest rate risk
- BConcentration risk✓ Correct answer
- CMarket risk
- DLiquidity risk
Explanation
Why B — Concentration risk
By focusing on one industry, the fund is exposed to concentration risk if the sector suffers. Interest rate, market, and liquidity risks may also exist, but are not due to lack of diversification.
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