Ask Question
13 December, 14:11

Rapid inflation, cyclical unemployment, war, hurricanes, and floods are all examples of

+3
Answers (2)
  1. 13 December, 15:01
    0
    Rapid inflation, cyclical unemployment, war, hurricanes, and floods are all examples of non-diversifiable risk

    This is a kind of risk that affects the macro economy or large numbers of persons or groups within the economy and as a result cannot be eliminated via diversification
  2. 13 December, 15:53
    0
    Answer;

    -Non-diversifiable risk

    Rapid inflation, cyclical unemployment, war, hurricanes, and floods are all examples of non-diversifiable risk.

    Explanation;

    -A non-diversifiable risk is a risk that affects the entire economy or large numbers of persons or groups within the economy. It is a risk that cannot be eliminated or reduced by diversification. Examples include rapid inflation, cyclical unemployment, war, hurricanes, floods, and earthquakes because large numbers of individuals or groups are affected.

    -A diversifiable risk on the other hand is a risk that affects only individuals or small groups and not the entire economy. It is a risk that can be reduced or eliminated by diversification. For example, a diversified portfolio of stock investments is much less risky than an undiversified portfolio that is invested in a single stock.
Know the Answer?