Question
Which of the following are CORRECT about risks in the capital market? I. The US Federal Reserve Bank just announced a 0.5% interest rate increase.
Which of the following are CORRECT about risks in the capital market?
I. The US Federal Reserve Bank just announced a 0.5% interest rate increase. This impacts the systematic risk in the US capital market.
II. The Heng Seng Index has a higher variance recently. This means the unsystematic risk is higher in the Hong Kong capital market.
III. Two stocks are traded in the Hong Kong Stock Exchange. Stock As return comoves with the Heng Seng Index more closely than Stock B. Stock A has a higher systematic risk.
IV. Two stocks are traded in the Hong Kong Stock Exchange. Stock As return comoves with the Heng Seng Index more closely than Stock B. Stock A has a higher unsystematic risk.
A. I and III only
B. I and IV only
C. II and III only
D. II and IV only
E. I and II only
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