- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 53. Portfolio Risk and Return: Part II
- Subject 2. Pricing of Risk and Computation of Expected Return
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 |