SIE practice questionhardSystematic Risk — Types
All of the following are types of systematic risk EXCEPT:
- AInterest rate risk
- BInflation risk
- CBusiness risk✓ Correct answer
- DMarket risk
Explanation
Why C — Business risk
Business risk is UNSYSTEMATIC (company-specific) — it relates to a particular company's operations, management, competition, and industry conditions. Systematic risks affect the entire market: interest rate risk (A), inflation risk (B), market risk (D), plus currency risk and political risk. Systematic risk cannot be diversified away; unsystematic (business) risk can be reduced through diversification.
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