Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as____________?
Correct answer: C. Diversifiable risk
- A. Stock risk
- B. Portfolio risk
- C. Diversifiable risk
- D. Market risk
Explanation
Strikes, failed marketing efforts, and lawsuits are largely company-specific events that can be reduced through diversification. This makes them examples of diversifiable, or unsystematic, risk rather than market risk.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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