identify each of the following risks as most likely to be systematic risk or diversifiable risk

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Systematic risk: Systematic risk is the risk inherent to the entire market or market segment. Systematic risk underlies other investment risks, such as industry risk. If an investor has placed too much emphasis on cybersecurity stocks, for example, she/he can diversify this by investing in a range of stocks in other sectors, such as healthcare and infrastructure. Systematic risk, however, incorporates interest rate changes, inflation, recessions and wars, among other major changes.To manage systematic risk, investors should ensure that their portfolios include a variety of asset classes, such as fixed income and cash, each of which will react differently in the event of a major systemic change.

Unsystematic or diversifiable risk:Under diversifiable risk uncertainty inherent in a particular company or industry investment. Types of unsystematic risk include a new competitor in the marketplace with the potential to take significant market share from the company invested in, a regulatory change.By owning a variety of company stocks across different industries, as well as by owning other types of securities in a variety of asset classes, such as Treasuries and municipal securities, investors will be less affected by single events

Thanks

I think you forgot to type the items for which you want classification as systematic & unsystematic risk.

jeff jeffy answered 1 year ago

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