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Which one of the following is an example of systematic risk?
A.Major lay-off by a regional manufacturer of power boats.
B.Increase in consumption created by a reduction in personal tax rates.
C.Surprise firing of a firm's chief financial officer.
D.Closure of a major retail chain of stores.
E. Product recall by one manufacturer.

Respuesta :

Answer: Option B

                           

Explanation: Systematic risk points to the uncertainty of the industry or market segment as a whole. Systematic risk, often recognized as "undiversifiable danger," "fluctuation," or "market risk," affects not only a single share or sector, but the market at large. It is both uncertain and impossible to remove this type of risk altogether.

Thus, from the above we can conclude that the correct option is B as the changes in tax rates impacts the whole industry. Also such changes are in the hands of government therefore,. these are both unpredictable and unavoidable.

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