Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Market risk is referred to as:
- systematic risk.
- total risk.
- diversifiable risk.
- asset specific risk.
Expert Solution
Step 1 What is market 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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