Result of firm-specific risk or market risk-markets crash

Reference no: EM13690960

For each of the following, state whether it is a result of firm-specific risk or market risk.

a. Markets crash, leading to a global recession

b. The owners and managers of a firm decide to short-sell stock in the firm and drive the firm to bankruptcy, destroying the value of shares in the firm

c. A report of health risks associated with a new drug lowers returns on a pharmaceutical company.

d. A meteor hits the earth, drastically lowering stock returns.

e. Suppose a tech bubble bursts, which greatly affects tech stocks and marginally affects other stocks. Does this fit neatly into either category?

Reference no: EM13690960

Questions Cloud

Marginal-average tax rate paid for firm of taxable income : What is the (1) marginal and (2) average tax rate paid for a firm of taxable income of:

Straight-line depreciation with a depreciable life : A project will require the investment of $108,000 in equipment (straight-line depreciation with a depreciable life of 8 years and zero salvage value) and $25,000 in raw materials (not depreciable). Net annual project income before-tax depreciation wi..

Federal reserve increases interest rates : Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 ..

Result of firm-specific risk or market risk-markets crash : For each of the following, state whether it is a result of firm-specific risk or market risk. Markets crash, leading to a global recession.

Variables would affect the cash flow for a firm : A change in which of the following variables would affect the cash flow for a firm?

Expected economic profit problem : Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 ..

Price elasticity of demand for this curve at any arbitrary : Price elasticity of demand for this curve at any arbitrary point (say point E). To do so, first write the algebraic form of this Use your results from part a together with the fact that distance X in the figure is given by the current price, P*, to s..

User Account

All Pages