Fluctuations of a Stock's Return That Are Due to Market-Wide

question 71

Multiple Choice

Fluctuations of a stock's return that are due to market-wide news representing common risk is the ________.

• A) idiosyncratic risk
• B) systematic risk
• C) unique risk
• D) unsystematic risk

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Definitions:

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.

Corporate Bond

A debt security issued by a corporation to investors, typically offering interest payments and principal repayment at maturity.

Yield Curve

A graph showing the relationship between bond yields and maturities, commonly used to gauge future interest rate changes.

Term Structure

The relationship between the interest rates (or yields) and the maturities of debt securities such as bonds.