Which of the Following Represent Undiversifiable Risks

question 39

Multiple Choice

Which of the following represent undiversifiable risks?
I. The Federal Reserve raises interest rates.
II. A product is recalled because of safety problems.
III. The economy slips into a recession.
IV. The CEO 's divorce settlement forces him to sell off half of his stock holdings.

• A) I, II and IV only
• B) II and IV only
• C) I and III only
• D) I, II and III only

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Definitions:

Public Corporation

A company whose shares are traded freely on a stock exchange, owned by public investors, and subject to specific disclosure and regulatory requirements.

Transfer Agents

Organizations or individuals responsible for maintaining records of securities owners and managing the transfer of stock or bonds between parties.

Retained Earnings

Definition: The portion of a business's profits not distributed as dividends to shareholders but instead retained for reinvestment or to pay off debt.

Cash Dividend

A payment of earnings declared by a company's board of directors, distributed among shareholders in the form of cash.