Risk That Affects a Large Number of Assets,each to a Greater

question 89

Multiple Choice

Risk that affects a large number of assets,each to a greater or lesser degree,is called ________ risk.

• A)idiosyncratic
• B)diversifiable
• C)systematic
• D)asset-specific
• E)total

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Definitions:

Put Option

An agreement that grants the holder the option to sell a predetermined quantity of a basic asset at an agreed price during a defined period, without being obligated to do so.

Risk-Free Asset

An investment security that is guaranteed to return its full investment value (e.g., U.S. Treasury securities).

Market Price

The existing rate at which an asset or service can be sold or bought.

Convertible Bond

A type of bond that can be converted into a predetermined number of shares of the issuing company's stock at certain times during its life, usually at the discretion of the bondholder.