**Question**: One example of a nondiversifiable risk is the sudden:- Resignation of a key employee of a major manufacturer.- Replacement of a firm's workforce with robots.- Passing of a well-respected Federal Reserve Bank chairman.**Explanation**: This question is designed to test your understanding of nondiversifiable risks, which are risks that affect a large number of assets across the market or are inherent to the entire market itself. Though individual company events can impact businesses, nondiversifiable risks are systemic and typically can't be mitigated through diversification.

Non diversifiable risk are beyond the control of the business i.e., unavoidable.

Answered: One example of a nondiversifiable risk…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

4 Jamie is an auditor. While preparing to audit his client, FoodCourt, he finds a weakness in the company's internal control that might suggest that the company has a higher than normal risk, and revenue may have been recorded in the wrong period. Given this weakness, what information should be communicated to management? 5 What is the relationship between the internal control system and risk management with corporate governance? How can the internal control system enhance a company s corporate governance?
27. An audit firm has been asked by a client to attend a meeting between the client and its bank where a new bank loan application is to be discussed. According to the Code of Professional Ethics for Accountants, what type of threat to objectivity will be created if the auditor attends this meeting? a. Self interest threat b. Intimidation threat c. None of the options d. Self review threat
Mark Buffalo works for a mid-size accounting firm in Boston. One day he overhears a colleague talking to a friend on his cellphone. Mark gasps when he realizes the colleague is sharing one of their client's confidential information, likely as an insider trading tip. As a member of the AICPA, Mark is required to report this discreditable act to the Boston chapter of the AICPA. Select one: True False
Identify each of the following risks as most likely to be systematic risk or diversifiable risk: The risk that the economy slows, decreasing demand for your firm’s products due to COVID-19. The risk that your best employees will be hired away. The risk that the new product you expect your R&D division to produce will not materialize.
the madoff debacle case? what are the lessons? question 4:
The only way to prevent fraud in companies is strong corporate governance mechanism. The basic pillar of Corporate Governance is the auditor with no fear. Omani Law is against unjustified removal of auditors. Which authority has to be notified if a resolution for removal of auditor is passed? Non Regulatory Organizations Tax Authorities Regulatory Authority Management
Viljoen plc has suffered the following events:(1) An accidental failure of IT security resulting in publication of confidential client data(2) A deliberate breach of IT security resulting in client data being passed to a competitor(3) A new government regulation resulting in increased IT security costsWhich of these events are examples of cyber risks materialising?A. (1) and (2) onlyB. (1) and (3) onlyC. (2) and (3) only OD. (1), (2) and (3)
1. How would you suggest the standard-setter or the regulator mitigate the potensial decrease in the quality of corporate reporting
The objectives of a fraud investigation may include which of the following? Not getting the authorities involved Avoiding large insurance claims Posting embarrassing reports on social media Punishing the guilty and obtaining restitution
The head of the accounting department is not satisfied with the implementation of the new system. He believes that the new system will result in job losses for many of the bookkeepers. They are threatening industrial action. In your role as project sponsor, what should you do to resolve the situation?
What are the most frequent mistakes and scams that occur in the payroll and personnel processes?? In order to avoid or discover these blunders and scams, what are auditors searching for?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

One example of a nondiversifiable risk is the sudden: resignation of a key employee of a major manufacturer. replacement of a firm's workforce with robots. passing of a well-respected Federal Reserve Bank chairman