Part 3, Risk Classification, 3 points, 1 points each Classify each of the follow

Question

Part 3, Risk Classification, 3 points, 1 points each Classify each of the following as systematic (5) or unsystematic (U) and determine whether the informa change in pricesby incaingone of the ting one of the following: increase (), decrease (D). If you would like to justify your response, you may do so in the space below the table 31. Congress announces that it is likely to pass the tax bill which will lower the top corporate 32. tax rate from 35% to 21%. Waste Management announces a 9.4% increase in its dividend. Walt Disney Co.'s The Last Jedi' opens with $220 million in ticket sales which is the 2nd 33. best weekend of all-time.

Explanation / Answer

Systematic risk, also known as "market risk" or "un-diversifiable risk", is the uncertainty inherent to the entire market or entire market segment. thse risk is arise due to market factor that is outside the company and if affect the whole market.

Diversifiable risk also called unsystematic risk is company specific risk that can be reduce through diversification of investment. this type of risk is specific to particular firm.

31.

Congress announce to reduce corporate tax rate from 35% to 21%. SInce, this decision affect the whole market, so this is an example of systematic risk. Since tax rate reduces, so systematic risk also decreases.

32.

Waste management, a particular company announce a increase in dividend by 9.40%. So, this is an example of unsystematic risk. since company increase the dividend, so unsystematic risk decreases.

33.

Sale of ticket depends on consumer which is not in control of company. So, this is an example of systematic risk. since, sale have increases so systematic risk decreases.

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