Which of the Following Statements About the Various Kinds of Risks

Multiple Choice

Which of the following statements about the various kinds of risks is correct?

A) Economic risk is a market risk, hence it should not be rewarded by the market.
B) A firm's default risk is a diversifiable risk, hence it should be rewarded by the market.
C) Exchange rate risk is a diversifiable risk, hence it should not be rewarded by the market.
D) Inflation risk is an unsystematic risk, hence it should not be rewarded by the market.
E) Interest rate risk is a systematic risk, hence it should be rewarded by the market.