Issuer Specific Risk

Select an option above to see an explanation here.

A) A change in interest rates is an example of interest rate risk, not issuer-specific risk. B) A company's poor financial performance is an example of issuer-specific risk, as it is particular to the company and not the overall market. C) A decline in the overall stock market is an example of systematic risk, not issuer-specific risk. D) An increase in inflation is an example of inflation risk, not issuer-specific risk.

Select an option above to see an explanation here.

A) Investing in a single stock increases issuer-specific risk, as the investor's portfolio is concentrated in one company. B) Investing in bonds can help reduce issuer-specific risk, but diversification across various assets is a more effective strategy. C) Diversifying investments across various assets helps reduce issuer-specific risk, as it spreads the risk across multiple companies and industries. D) Investing in real estate can help diversify a portfolio, but it is not the only way to reduce issuer-specific risk.

Select an option above to see an explanation here.

A) Operational risk is an issuer-specific risk, as it is related to a company's internal processes, people, and systems. B) Legal risk is an issuer-specific risk, as it is related to legal actions or regulatory changes that impact a particular company. C) Market risk is a systematic risk affecting the entire market or asset class and cannot be reduced through diversification. D) Reputational risk is an issuer-specific risk, as it is related to the public perception of a specific company's brand or image.