Question
___________ implies the overall market risk that affects
all securities and cannot be diversified away.Solution
Systematic risk implies the overall market risk that affects all securities and cannot be diversified away. Systematic risk, also known as market risk or non-diversifiable risk, refers to the risk inherent in the overall market or the entire economy. It is beyond the control of an individual investor and affects all securities in the market. This type of risk cannot be eliminated through diversification because it is not specific to any particular company or industry. Factors contributing to systematic risk include macroeconomic events, changes in interest rates, political instability, natural disasters, and other broad market influences. Investors can manage systematic risk through various risk management strategies, such as asset allocation and hedging.
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A read bit can be read
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