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Market risk is referred to as:
- systematic risk.
- total risk.
- diversifiable risk.
- asset specific risk.
Market risk is the type of risk that affects the whole market. Market risk is not specific to a single stock but the whole market will get affected by the market risk. Because market risk is not stock specific it cannot be eliminated by diversification. Market risk includes the risk of change in government policy, natural calamities, fall in world economies, etc.
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Solved in 2 steps
- What type of risk is the risk that belongs to the market as a whole? Systematic risk Unsystematic risk (or nonsystematic risk) Total riskBriefly define and give examples of each of the following components of total risk. Which type of risk matters, and why? Diversifiable (or firm-specific) risk Undiversifiable (or systematic) riskExplain the difference between financial risk andbusiness risk.
- How the following risk can be mitigated and managed 1. Market risk 2. Liquidity risk 3. Insolvency risk 4. Credit riskWhich of the following statements is true? Select one: Total risk = market risk + unique risk. Total risk = systematic risk + undiversifiable risk. Total risk = unique risk + diversifiable risk Market risk = undiversifiable risk + systematic risk. Total risk = diversifiable risk + firm-specific risk.Portfolio risk is comprised of risk, risk. Select one: a. diversifiable; plus unsystematic
- CAPM accounts for a. Unsystematic risk b. Systematic risk c. Both Systematic and Unsystematic risk d. Unique riskRisk designates any uncertainty that might trigger losses. These risks include all except: a. Market risk b. Systemic risk c. Liquidity risk d. Credit riskWhat is definitions of this? Systematic risk Risk free rate of return Market rate of return, and Risk premium.
- Market risk is referred to as: systematic risk. total risk. diversifiable risk. asset specific risk. Standard deviation and beta both measure risk, but they are different in that beta measures both systematic and unsystematic risk. beta measures only systematic risk while standard deviation is a measure of total risk. beta measures only unsystematic risk while standard deviation is a measure of total risk. beta measures both systematic and unsystematic risk while standard deviation measures only systematic risk. beta measures total risk while standard deviation measures only nonsystematic risk. Buying common stock is riskier than buying a U.S Treasury bill. state reason in 'other' true False Other: Which one of the following statements is an example of unsystematic risk? The number of vehicles sold by a major manufacturer was less than anticipated. GDP was 0.5 percent lower than expected. The inflation rate increased by 5 percent. The value of the dollar declined against…Define market riskTotal risk can be divided into: standard deviation and variance. standard deviation and covariance. portfolio risk and beta. systematic risk and unsystematic risk. portfolio risk and covariance.