Which One of the Following Is an Example of a Nondiversifiable

question 116

Multiple Choice

Which one of the following is an example of a nondiversifiable risk?

• A) A well-respected president of a firm suddenly resigns.
• B) A well-respected governor of the Bank of Canada suddenly resigns.
• C) A key employee of a firm suddenly resigns and accepts employment with a key competitor.
• D) A well-managed firm reduces its work force and automates several jobs.
• E) A poorly managed firm suddenly goes out of business due to lack of sales.

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Definitions:

Price

The money measure forecasted, demanded, or given in fulfillment of something.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting its perceived value.

Price

Price is the amount of money that must be paid to acquire a good or service.

Consumer Surplus

The gap between what consumers are ready and able to spend for a good or service and the actual amount they pay.