Answer:
The correct answer is letter "B": unsystematic risk.
Explanation:
Unsystematic risk is a threat specific to the business or sector that is inherent in any investment. Examples of unsystematic risk include a new competitor, regulatory reform, a change of management or recall of a product. By diversifying into other equity sectors or other forms of securities like Treasury Bonds or Municipal securities, investors may significantly reduce unsystematic risk.
A stock drop due to losses reported as a result of a decrease in the quality of the issuing company's products is considered an inherent risk of that security, therefore, it is unsystematic risk.
