Final answer:
The statement 'the number of vehicles sold by a major manufacturer was less than anticipated' is an example of unsystematic risk, which is specific to an individual company or industry and can be mitigated through diversification, unlike systematic risk that affects the whole market. O the value of the dollar declined against the other major currencies.
Step-by-step explanation:
In financial markets, risk can be categorized as systematic or unsystematic. Unsystematic risk refers to the risk that is inherent to a specific company or industry. This type of risk can be mitigated through diversification. On the other hand, systematic risk affects the entire market and is not company-specific, thus it cannot be eliminated simply through diversification.
The example of unsystematic risk provided in the question is 'the number of vehicles sold by a major manufacturer was less than anticipated'. This is an event that specifically impacts a particular company's sales volumes and revenues, and not the entire market or economy. In contrast, changes in GDP, inflation rates, and the value of the dollar against other major currencies would be examples of systematic risks, as they affect the entire economy and all participants within it.
To illustrate unsystematic risk further, consider a situation such as the impact of Hurricane Katrina in 2005 on gas prices. This was a temporary event that caused an abrupt increase in gas prices, but was specific to the circumstances of the time and location. Had it been the result of a company's policy or performance, it would have represented an unsystematic risk for that company.
It is essential for investors to understand the differences between these two types of risks in order to manage and structure their investment portfolios appropriately, seeking to minimize unsystematic risk through diversification and preparing for systematic risk with suitable investment strategies.