Unit 11 - Types of Investment Risk Flashcards
1
Q
What is systematic risk?
A
Systematic risk is associated with macroeconomic factors that affect all risky assets. A good example is COVID-19.
2
Q
What is unsystematic risk?
A
These are risks that are specific to an industry or business, and can be reduced through diversification.
3
Q
Which of the following risks are considered not diversifiable?
Currency Risk | Liquidity Risk | Purchasing Power Risk | Sovereign Risk
A
Purchasing Power Risk
4
Q
Is liquidity considered a systematic risk or unsystematic risk?
A
Unsystematic Risk
