An analyst is evaluating potential risks associated with holding individual corporate bonds issued by specific companies. Which of the following events represent non-systematic (unsystematic) risks for these bondholders?
- A major product recall causing significant revenue loss for a single issuing corporationCevap
- A credit rating downgrade of a specific corporate issuer following an unexpected earnings declineCevap
- CA decision by the Federal Reserve to raise benchmark interest rates across the entire economy
- DAn unexpected rise in nationwide inflation eroding the purchasing power of fixed bond payments
Cevap
The events representing non-systematic risks are a major product recall for a single corporation and a credit rating downgrade of a specific corporate issuer.
Non-systematic risks are specific to an individual company or issuer. A product recall that damages a single firm's sales (business risk) and a credit rating downgrade of a specific corporate entity (credit risk) are both classic examples of non-systematic risks. By contrast, broad interest rate changes and nationwide inflation impact the overall financial market and represent systematic risk.
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Anahtar Kavram
Non-systematic risks (such as business risk and credit risk) are specific to an individual issuer or industry, whereas systematic risks (such as interest rate risk and inflation risk) affect the broader market as a whole.