CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

An investor reads an article regarding one of his holdings. He is surprised to find out that there is significant evidence of massive accounting fraud at the firm. This source of risk is best described as ______.
A. unsystematic
B. systematic
C. financial
Explanation: This source of risk is unique to the firm.

User Contributed Comments 9

User Comment
kalps Unsystematic can be diversified away
iceluke did not know that
stevelaz Unsystematic is company specific risk
steved333 God DAMN it!!! I keep mixing these up!!!
soukhov UNsystematic = UNwise (to have in portfolio)
zed888 why is it not financial risk?
Rchan89 there is only systematic and unsystematic risk in considering portfolios, not financial
farhan92 "unsystematic is unique to the firm" this is an important one to remember also as this wouldn't come under being diversified away
kingirm How can you diversify fraud risk ? Not possible....so it should be systematic risk
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