ldentify each of the following risks as most likely to be systematic risk or div

Question

ldentify each of the following risks as most likely to be systematic risk or diversifiable risk: a. The risk that your main production plant is shut down due to a tornado. b. The risk that the economy slows, decreasing demand for your firm's products c. The risk that your best employees will be hired away d. The risk that the new product you expect your R&D; division to produce will not materialize. a. The risk that your main production plant is shut down due to a tornado This risk is b. The risk that the economy slows, decreasing demand for your firm's products This risk is c. The risk that your best employees wll be hired away V. (Select from the drop-down menu.) V. (Select from the drop-down menu.) This ik s (Belect from the drop- V. (Select from the drop-down menu.) d. The risk that the new product you expect your R&D; division to produce will not materialize. This risk is V. (Select from the drop-down menu.)

Explanation / Answer

a) The risk is systematic risk MACRO economic factor. Affects all firms in the industry. b) The risk is systematic risk MACRO economic factor. Affects all firms in the industry. c) The risk is diversifiable risk This factor affects only this firm. d) The risk is diversifiable risk This factor affects only this firm.

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