[amp_mcq option1=”the risk associated with movements in security prices” option2=”reduced through diversification” option3=”higher when interest rates rise” option4=”the risk of loss of purchasing power” correct=”option1″]<\/p>\n
The correct answer is: A. the risk associated with movements in security prices.<\/p>\n
Unsystematic risk is the risk that is specific to a particular security or asset class. It is also known as diversifiable risk or company-specific risk. This type of risk can be reduced through diversification, which means investing in a variety of assets that are not correlated with each other.<\/p>\n
Systematic risk is the risk that affects the entire market or a large segment of the market. It is also known as market risk or non-diversifiable risk. This type of risk cannot be reduced through diversification.<\/p>\n
Interest rates are the cost of borrowing money. When interest rates rise, the cost of borrowing money increases, which can lead to a decrease in the value of assets. This is because assets are priced based on the future cash flows they are expected to generate. When interest rates rise, the present value of these cash flows decreases, which leads to a decrease in the value of the asset.<\/p>\n
The risk of loss of purchasing power is the risk that the value of money will decrease over time. This is due to inflation, which is a general increase in prices. When prices increase, the purchasing power of money decreases. This means that the same amount of money will buy less goods and services in the future.<\/p>\n
I hope this helps!<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”the risk associated with movements in security prices” option2=”reduced through diversification” option3=”higher when interest rates rise” option4=”the risk of loss of purchasing power” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-52087","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n