Certified Financial Planner (CFP) Practice Exam · Question
Scenario 24: Which of the following describes the 'systematic risk' (or market risk) component of an investment?
Systematic risk, also known as market risk, is the risk inherent to the entire market or market segment that cannot be eliminated through diversification. The c
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Question: Scenario 24: Which of the following describes the 'systematic risk' (or market risk) component of an investment?
Answer options:
- Risk that can be eliminated through diversification. ✅ Risk inherent to the entire market or market segment.
- Risk specific to a particular company or industry.
- Risk associated with interest rate changes.
Correct answer: Risk inherent to the entire market or market segment.
Explanation: Systematic risk, also known as market risk, is the risk inherent to the entire market or market segment that cannot be eliminated through diversification. The correct answer is "Risk inherent to the entire market or market segment.". This capacity-fill scenario 24 reinforces the same competency for the cfp bank and follows the certified explanation standard.
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