Products & Their RisksQuestion 53 of 398
Market (systematic) risk is best described as the risk that:
a.Broad market declines will affect nearly all securities regardless of the individual issuer
b.A single company will mismanage its operations
c.A specific bond issuer will default
d.A stock will be hard to sell quickly
Explanation
Market or systematic risk affects the entire market from broad factors like recessions or rate shifts, so it cannot be diversified away. Company mismanagement is business risk, issuer default is credit risk, and difficulty selling is liquidity risk.
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