SIE practice questionmediumConcentration risk
A portfolio holds only pharmaceutical companies. If the sector faces regulatory scrutiny and declines, what risk is realized?
- ACurrency risk
- BCredit risk
- CConcentration risk✓ Correct answer
- DInterest rate risk
Explanation
Why C — Concentration risk
Overexposure to a single sector increases vulnerability to sector-specific issues, which is concentration risk. The other risks are less relevant in this context.
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