SIE practice questionmediumPolitical/legislative risk
A pharmaceutical company's stock price drops sharply after a new law restricts the sale of one of its leading drugs. What risk is this an example of?
- ACurrency risk
- BPolitical/legislative risk✓ Correct answer
- CReinvestment risk
- DInterest rate risk
Explanation
Why B — Political/legislative risk
Political/legislative risk is driven by changes in government policies or regulations that can impact company performance. Currency risk relates to exchange rates, reinvestment risk to income stream returns, and interest rate risk to rates changing in the economy.
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.
Related Investment Companies & Packaged Products questions
- Which of the following is considered an unsystematic risk?
- Which best distinguishes systematic from unsystematic risk?
- Under FINRA's suitability rules, a registered representative must have a reasonable basis to believe a recommendation…
- A foreign government unexpectedly nationalizes its banks, causing local bond prices to fall. U.S. investors in those…