Which of the Following Is NOT a Diversifiable Risk

question 8

Multiple Choice

Which of the following is NOT a diversifiable risk?

• A) the risk that oil prices rise, increasing production costs
• B) the risk that the CEO is killed in a plane crash
• C) the risk of a key employee being hired away by a competitor
• D) the risk of a product liability lawsuit

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Definitions:

Outstanding Common Shares

The total number of shares of common stock that are currently owned by investors, including shares held by institutional investors and restricted shares held by insiders and company officers.

Noncontrolling Interest

The portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company, which reflects the interests of minority shareholders in the consolidated financial statements.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from the total revenue.

Initial Value Method

An accounting approach where investments are recorded at their initial purchase cost without subsequent adjustment for changes in market value.