Which one of the following is considered an example of systematic risk? a. lower company sales...
Which one of the following is considered an example of systematic risk?
a.
lower company sales than predicted
b.
higher company profits than those forecasted
c.
a higher inflation rate than predicted
d.
an increase in overseas sales for Telstra
e.
resignation of a firm's chief financial officer
Homework Answers
SOLUTION
c) A HIGHER INFLATION RATE THAN PREDICTED
REASON:
SYSTEMATIC RISK IS A WIDE MARKET RISK, IT INVOLVES VOLATILITY,
SYSTEMATIC RISK IS UNPREDICTABLE IN NATURE AND IT IS A TOTAL RISK MARKET WHICH AFFECTS ENTIRE ECONOMY.
INFLATION IS ON OF THE BEST EXAMPLE OF SYSTEMATIC RISK, WHERE VOLATILITY OR FLUCTUATIONS HAPPENS, ABOVE, BELOW, PAR TO THE PREDICTION
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