Topic 6 - Risk and Valuation Flashcards
1
Q
What is Systematic Risk?
A
A systematic risk is a source of risk that potentially affects many securities of various events at one moment in time such as the economy - the risk of a collapse of a whole financial system or a market
Examples - information surprises about inflation, industrial productivity, entry to the Euro
2
Q
What is an unsystematic risk?
A
This is the risk that effects an individual or small group of securities such as a company
Examples are - information surprises about drug discoveries, corporate boardroom problems, takeover bids
