Series 7 Exam Question 328: Answer and Explanation

Question: 328

If the FDA increases pollution standards that are more costly for oil companies, investors who own shares of oil company stock would most likely see the value of their shares decline due to

• A. purchasing power risk
• B. reinvestment risk
• C. credit risk
• D. regulatory risk

Correct Answer: D

Explanation:

D. Regulatory risk is the risk that the price of a security will decline due to new regulations placed on specific corporations.