The Systematic Risk

question 34

Multiple Choice

The systematic risk

• A) is specific to some investments.
• B) can be eliminated with portfolio diversification.
• C) is common to all investments and cannot, therefore, be eliminated through portfolio diversification.
• D) is equal to the difference between the forward rate and the expected future spot rate.

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Definitions:

Regulations

Rules or directives made and maintained by an authority to regulate behavior or enforce standards.

Black Market Transaction

Illicit trade activities that occur outside authorized legal channels, often involving prohibited goods or services.

Rent-Controlled Apartment

A rental unit where the government controls the amount of rent charged to protect tenants from rapid increases.

Price Floor

A minimum price set by the government or a governing body below which a product cannot be sold legally.