Differentiate Investment Risks
Series 65 · Flashcards · Application
SERIES 65 · FLASHCARDS
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QUESTION
Identify the risk type: a sudden economy-wide recession reduces most stock prices.
QUESTION
If a stock has
β
=
1.5
\beta=1.5
β
=
1.5
, how does its systematic risk compare to the market?
QUESTION
Identify the risk type: a company-specific accounting scandal causes one stock to fall.
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ANSWER
Unsystematic risk. Company-specific events impact only that stock, allowing diversification to mitigate such isolated risks.
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