The Interest Rate Changes That Result from the FOMC Meetings

question 128

Multiple Choice

The interest rate changes that result from the FOMC meetings:

• A)Can be altered only by Congress
• B)Can be altered by the Secretary of the Treasury during an economic crisis
• C)Cannot be changed by anyone other than the FOMC
• D)Can only be altered during a time of crisis by the U.S.President

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Definitions:

Business-Specific Risk

Variation in the return on a stock investment caused by things that affect specific businesses or industries.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be eliminated through diversification, often related to economic, political, or social factors.

Market Risk

Variation on the return on a stock investment caused by things that tend to affect all stocks.

Stand-Alone Risk

The risk associated with investing in a stock that’s held by itself, outside of a portfolio. Stand-alone risk depends on the volatility of a stock’s own return rather than on the effect its inclusion has on the volatility of the return of a portfolio.