Of the options listed below, which is the best example of unsystematic risk?

Question

BlackTom AI · Accepted Answer

Question restatement: The task asks for the best example of unsystematic risk among the listed options.
Option 1: 'An adoption of a national sales tax' — This is a policy change that affects the entire economy and many sectors, making it a systemic (market-wide) risk, not unsystematic.
Option 2: 'A national decrease in consumer spending on entertainment' — This targets a specific sector (entertainment) rather than the entire market. Firms in entertainment would be affected similarly, making this a sector-specific risk, i.e., unsystematic risk that could potentially be mitigated through diversification.
Option 3: 'A decrease in the national level of inflation' — Lower inflation is a macroeconomic condition impacting the whole economy, a systemic risk rather than unsystematic.
Option 4: 'An across-the-board increase in income taxes' — This is a government policy that alters the entire economy, hence systemic risk.
Option 5: 'An increased feeling of global prosperity' — A broad, optimistic macro condition affecting many markets; this is systemic in nature.
In summary, the only option that describes a risk confined to a specific sector (entertainment) rather than the entire market is Option 2, making it the best example of unsystematic risk among the choices.

BUSFIN 3220 AU2025 (2110) Exam 3 - Requires Respondus LockDown Browser

Of the options listed below, which is the best example of unsystematic risk?

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