Source of systematic risk or unsystematic risk

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Question 1:

Classify each of the following events as a source of systematic risk or unsystematic risk. Use one to two sentences to briefly justify your classification for each of the events.

(a) In March 2015, Former NAB banker Lukas Kamay was convicted of insider trading and was sentenced to seven years and three months in prison.

(b) Apple' share price sunk by more than 5% on the news of the death of Steve Jobs.

(c) The recent COVID-19 lockdowns in Sydney and Melbourne are causing security prices around the Australia to fall precipitously.

Question 2: Based on your recent research, there are six pharmaceutical companies working on a new COVID-19 vaccine for the Delta-variant. As an investor, you have the option of investing in one of them versus all six of them:

(a) Is your systematic risk likely to be very different? Why?

(b) If you decide to invest in all six pharmaceutical companies and form an investment portfolio accordingly, would you consider such investment portfolio is well-diversified? Explain.

Reference no: EM133069316

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