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Basic Question 1 of 11
Which of the following statements is not true?
B. Unsystematic risk is a risk that specifically affects a single asset.
C. Examples of systematic risk include uncertainty about GNP, interest rates, and inflation.
D. An example of unsystematic risk includes the announcement of an oil strike by a petroleum company.
E. Beta measures the response of a stock's return to unsystematic risk.
A. Systematic risk is any risk that affects almost all securities.
B. Unsystematic risk is a risk that specifically affects a single asset.
C. Examples of systematic risk include uncertainty about GNP, interest rates, and inflation.
D. An example of unsystematic risk includes the announcement of an oil strike by a petroleum company.
E. Beta measures the response of a stock's return to unsystematic risk.
User Contributed Comments 8
| User | Comment |
|---|---|
| danlan | Beta is related to response of return to systematic risk |
| julescruis | Beta measure the correlation of one stock to all securities in the market, in other words "the market portfolio". Since the market portfolio has no unsystematic risk (as it has been completely diversified aways), it is only exposed to systematic risk. A: Systematic risk affects almost all securities but not T-securities. |
| hannovanwyk | Doesn't the strike of petroleum company produce a higher fuel price, which in turn causes higher interest rates(economics), and therefore influence the whole market? --under the assumption the fuel company is significant in market share. In my opinion D and E would be the right answer |
| sheenalim | I agree with hanno. An event related to petroleum affects the economy as a whole. |
| zactompson | but it is A strike of AN oil company, not by ALL oil companies. |
| johntan1979 | Yup, argue all you want. Good luck in the real exam. |
| jonan203 | seriously guys, it was funny six modules ago, but read the notes before doing the questions, and read the questions carefully before answering. |
| Shaan23 | Seriously...its crazy. Agree with Jonan. Read the notes. |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
calculate and interpret beta
CFA® 2024 Level I Curriculum, Volume 2, Module 2.