The Unsystematic Risk of a Specific Security

question 50

Multiple Choice

The unsystematic risk of a specific security

• A) is likely to be higher in an increasing market.
• B) results from factors unique to the firm.
• C) depends on market volatility.
• D) cannot be diversified away.

---

Definitions:

Equity Securities

Financial instruments that represent ownership interest in a company, such as common stock, and typically provide voting rights and potential dividends.

Creditor Relationship

The financial relationship that exists between a borrower or debtor and a lender, where the lender provides a loan or credit to the borrower.

Cash Equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Mature

In finance, it refers to the stage at which an investment or financial instrument reaches its final due date and the principal is returned to the investor.