Question

Inflation, recession, and high interest rates are economic events which are characterized as Select one: a. Unsystematic risk that can be diversified away. b. Company-specific risk that can be diversified away. c. Systematic risk that can be diversified away. d. Market risk that cannot be diversified away. e. Diversifiable risk that can be diversified away.

Answer 1

D.

Step-by-step explanation:

Market Risks can be defined as the possibility of losses that the investor may face in investment because of the changes in the market factors. These market factors possess the power that influences the whole financial markets. It is also known as 'systematic risk.' Such risks can not be diversified.

The sources that lead to market risks are inflation, high-interest rates, recession, natural disasters, terrorist attacks, commodity risk, etc.

So, from the given options the correct one is D.