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What risk type is prevalent regardless of the level of portfolio diversification or hedging?
Suggested Answer: A
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Market risk (systematic risk) cannot be eliminated by diversification or hedging; it affects all securities in the market (e.g., recessions, geopolitical events, interest rate changes).
Default risk (B) relates to specific issuers of debt.
Unique risk (C) is company-specific and can be diversified away.
12 comments · newest first
HE
Helene
1 month ago
But what about D) Inflation? It's a constant threat too.
VA
Valda
1 month ago
I agree, A) Market is always there. Can't escape it.
CO
Corinne
1 month ago
I think it's A) Market. It affects everyone.
NE
Nelida
2 months ago
I find it hard to believe market risk is always a factor.
NI
Nina
2 months ago
Wait, are you sure it's not C) Unique risk?
NA
Natalya
2 months ago
A) Market risk is the right answer, no doubt!
EL
Eleonora
2 months ago
I thought it was D) Inflation risk?
RO
Rodolfo
2 months ago
Definitely A) Market risk! It's always there.
EM
Emogene
2 months ago
I’m confused because unique risk seems like it could be a factor too, but I guess that’s more about specific assets? Maybe it’s still A) Market?
TE
Terrilyn
3 months ago
I feel like we covered this in class, and I think it was about market risk being unavoidable. So, A) Market seems right.
GE
Gerardo
3 months ago
I'm not entirely sure, but I remember something about inflation being a constant concern. Could it be D) Inflation?
JE
Jeffrey
3 months ago
I think the answer might be A) Market risk, since it affects all investments regardless of how diversified a portfolio is.