Which of the Following Is a Diversifiable Risk

question 98

Multiple Choice

Which of the following is a diversifiable risk?

• A)the risk that oil prices rise,increasing production costs
• B)the risk that the economy slows,reducing demand for your firm's products
• C)the risk that your new product will not receive regulatory approval
• D)the risk that the Bank of Canada raises interest rates
• E)the risk that a new government is elected and raises corporate taxes

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Definitions:

Credit Risk

The risk of loss arising from a borrower's failure to repay a loan or meet contractual obligations.

Mortgage-Backed Securities

Financial instruments secured by a pool of mortgage loans, whose cash flows are passed through to investors.

Monthly Interest

Interest calculated or paid on a debt or investment on a monthly basis.

Homogeneous Pools

Groups of assets or securities that are similar in nature, making them easier to analyze collectively.