The risks associated with owning a single stock are called:

A) systematic risk because all stocks in the system are affected.
B) market risk because the stocks are purchased in the stock market.
C) stand-alone risk because the stock stands alone outside of any portfolio.
D) business risk because the stocks represent businesses.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be eliminated through diversification, often related to economic, political, or social factors.

Market Risk

Variation on the return on a stock investment caused by things that tend to affect all stocks.

Stand-Alone Risk

The risk associated with investing in a stock that’s held by itself, outside of a portfolio. Stand-alone risk depends on the volatility of a stock’s own return rather than on the effect its inclusion has on the volatility of the return of a portfolio.