Question

For each of the following events, explain whether it represents systematic risk or idiosyncratic risk and explain why.
a. Your favorite restaurant is closed by the county health department.
b. The government of Spain defaults on its bonds, causing the breakup of the euro area.
c. Freezing weather in Florida destroys the orange crop.
d. Solar flares destroy earth-orbiting communications satellites, knocking out cellphone service worldwide.



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  • CreatedOctober 02, 2014
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