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True or false: Labor strikes are an example of systematic risk.True false question.TrueFalse

Question

True or false: Labor strikes are an example of systematic risk.

True false question.

  • True
  • False
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Solution

Understanding Systematic Risk

Systematic risk refers to the inherent risk associated with the overall market or economy that cannot be eliminated through diversification. It affects all securities in the market due to economic factors such as interest rates, recession, and geopolitical events.

Analysis of Labor Strikes

  1. Nature of Labor Strikes: Labor strikes represent a specific event wherein employees refuse to work as a form of collective bargaining against employers. While they may impact particular companies or industries, they do not necessarily reflect broader economic conditions affecting all companies.

  2. Impact Scope: The effect of labor strikes is usually localized, impacting the organizations involved, their workers, and possibly the supply chains, but not the entire economy or market. Systematic risks influence the entire market's performance, which strikes do not.

Conclusion

Given that labor strikes do not impact the broader market systemically, the statement is:

Final Answer: False. Labor strikes are not an example of systematic risk.

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