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

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14 July, 10:13

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

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Jaydin Best · Answer 1

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

Jimena Lester · Answer 2

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.