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Basic Question 6 of 8
True or False?
II. Investors are willing to pay more for stocks with high systematic risk components.
I. An example of systematic risk would be if the stock of airlines dropped after two airplanes crashed on the same day, making many passengers too nervous to fly.
II. Investors are willing to pay more for stocks with high systematic risk components.
User Contributed Comments 3
| User | Comment |
|---|---|
| Gina | it is not caused by macroeconomic factors nor does it affect all risky assets. in effect stock of bus companies might increase. |
| akanimo | risk can be diversified away by investing in other types of companies (say bus companies) ... so it cant be systematic risk |
| chcarnes | Investors need to be compensated more for stocks with high systematic risk components |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk
CFA® 2024 Level I Curriculum, Volume 2, Module 2.