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Many former employees at AlphaEnergy, an energy trading and supply company, had a large
part of their portfolio invested in AlphaEnergyʹs stock. These employees were bearing a high
degree of ________ risk.
A) unsystematic
B) systematic
C) market-specific
D) non-diversifiable

Respuesta :

jaquelinefvr

Answer:

Letter A is correct. Unsystematic risk.

Explanation:

Unlike systematic risk, which is an inherent market risk, unsystematic risk is inherent in a specific sector or company.

The case in point concerns the investment of former AlphaEnergy employees, which is a unsystematic risk, as the investment risk in single-company shares includes regulatory changes, management changes, loss of market due to competition and withdrawal of the product from the market.

To reduce this type of risk, investors should seek diversification in their stock portfolio.

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