Sarah, a 65-year-old retiree, relies on dividends from her blue-chip stock portfolio to cover a significant portion of her living expenses. Recently, there's been talk of a broad economic downturn impacting corporate earnings across many sectors. Which risk should Sarah be most concerned about affecting her dividend income?

Question: Sarah, a 65-year-old retiree, relies on dividends from her blue-chip stock portfolio to cover a significant portion of her living expenses. Recently, there's been talk of a broad economic downturn impacting corporate earnings across many sectors. Which risk should Sarah be most concerned about affecting her dividend income?

Answer options: ✅ Market Risk

• Currency Risk
• Liquidity Risk
• Credit Risk

Correct answer: Market Risk

Explanation: Market risk (or systematic risk) is the risk that an investment's value will decline due to broad market movements, often influenced by economic, political, or social events. A general economic downturn impacting corporate earnings across sectors directly relates to market risk.