Asked by Growing with Hussein on Jun 28, 2024
Verified
Assume all of the stocks in a given industry fall as a result of an announcement about the general health of the economy. This is an example of systematic risk.
Systematic Risk
The risk inherent to the entire market or market segment that cannot be eliminated through diversification.
General Health
A broad term referring to the overall physical and mental condition and well-being of an individual or population.
- Differentiate between systematic and unsystematic risks, providing examples and discussing their importance in managing a portfolio.
Verified Answer
DC
Dessy ChristinaJun 29, 2024
Final Answer :
True
Explanation :
Systematic risk refers to the risk that affects an entire market or market segment, such as changes in economic, political, or social factors. The scenario described involves an economic announcement impacting all stocks in a given industry, which is a classic example of systematic risk.
Learning Objectives
- Differentiate between systematic and unsystematic risks, providing examples and discussing their importance in managing a portfolio.