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Which one of the following is the best example of systematic risk?

A. increase in the productivity of auto manufacturers

B. increase in computer sales

C. decrease in the production costs of cell phones

D. decrease in the U.S. GDP

User Rajendra
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1 Answer

5 votes

Final answer:

A decrease in U.S. GDP (option D) is the best example of systematic risk, affecting the entire market or economy, unlike other options which represent unsystematic risks impacting specific sectors.

Step-by-step explanation:

Among the options provided, the best example of systematic risk is a decrease in the U.S. GDP. Systematic risk affects the entire market or economy, and not just a specific industry or company. This is contrasted with unsystematic risk, which impacts a particular company or industry. For instance, an increase in the productivity of auto manufacturers would be more related to unsystematic risk as it affects a specific sector.



Similarly, an increase in computer sales or a decrease in the production costs of cell phones also falls under unsystematic risk, impacting individual companies or sectors. Other examples of systematic risk include: a stock market collapse, rising inflation, a rise in the natural rate of unemployment, or a rise in oil prices, all of which have widespread impact on the economy.

User Jeremy Holt
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