Distressed Securities

H

heer

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In distressed securities investing, event risk is:
A) a source of both return and diversification.
B) a source of diversification only.
C) a source of return only.
 
A
I think I had some bullcrap question like this before. We had a long argument about unsystematic risk acting as a diversifier.
 
I went for C as well like the others…. answer is A
I don’t think I get it :(
Your answer: C was incorrect. The correct answer was A) a source of both return and diversification.
Event risk refers to the fact that the return on a particular investment within this class typically depends on a particular event for a company, and that can provide good diversification.
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I will search for the thread I was talking about. Hold……
 
That’s very helpful…I think I missed it earlier.
 
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