What's the difference between firm-specific risk and market risk? Will diversification eliminate one or both? Explain
Market risk refers to economywide risk created by variations in output. Firms in general have lower sales and profits when output falls. Because all firms are likely to suffer through the downturn, market risk cannot be eliminated by diversification. Firm specific risk is specific to firms or industries and not the entire economy. Since some changes will be good for one industry and bad for another, diversification can reduce firm-specific risk but not market risk.
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Brand management refers to
A) the efforts to maintain the differentiation of a product over time. B) selling the right to use a brand name in a particular market. C) picking a brand name for a new product that will attract attention. D) efforts to reduce the cost of production.
The most common definition that monetary policymakers use for price stability is
A) low and stable deflation. B) an inflation rate of zero percent. C) high and stable inflation. D) low and stable inflation.