CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Factors such as fluctuations in interest rates and changes in industrial production contribute to ______.
A. systematic risk
B. unsystematic risk
C. both systematic and unsystematic risk
Explanation: Systematic (market-related) risk is caused by macroeconomic variables such as interest rate volatility and variability in industrial production. Unsystematic risk is caused by company-specific attributes.

User Contributed Comments 1

User Comment
ecapocas This isn't exactly true. For example, insurance companies are heavily exposed to interest rate risk from their fixed income portfolio so the systemic risk of "interest rates" is NOT equally represented in these types of firms as it is..say, an entertainment software company with little debt and does not sell product on credit.
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