Systematic Risk

Posted in Finance, Accounting and Economics Terms, Total Reads: 829
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Definition: Systematic Risk

Systematic  risk is the risk which persists  on all the securities  and cannot  be diversified. It is the measure of an overall market risk.

There is a limit to which the risks can be diversified and after 15 -20 securities. The risk becomes non–diversifiable.

Those types of risks which can be diversified is known as non -systematic risks. 

These risks are specific to the firm or relevant to the industry.

 Examples :

Systematic risks on the other hand cover a broad range of industries.  This phenomena could be rise in price of crude oil , Euro Debt  crisis  the hallow effect of these events  have an impact on the securities of a wide range of industries.

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