SIE practice questionmediumMarket risk
An investor’s portfolio value drops sharply during a broad market downturn, even though the individual securities are from different industries. What is the investor mainly experiencing?
- AConcentration risk
- BMarket risk✓ Correct answer
- CLiquidity risk
- DCredit risk
Explanation
Why B — Market risk
Market risk is the potential for losses due to overall market decline, affecting all investments. Diversification does not protect against this risk. The other risks are unrelated.
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