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The stock of Plomb Co. falls sharply on news that its CEO has drowned in a boating accident while on vacation. This is an example of

A) Systematic risk
B) Unsystematic risk
C) Market risk
D) Diversifiable risk

1 Answer

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Final answer:

The stock market risk faced by Plomb Co. due to the CEO's death is an example of unsystematic risk, which is specific to the individual company.

Step-by-step explanation:

The stock market risk that Plomb Co. faces due to the CEO's death is an example of unsystematic risk. This risk is specific to the individual company and can be diversified away by investing in a portfolio of different stocks. In this case, the CEO's death is an unexpected event that affects the company's stock price but may not have a significant impact on the overall market.

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