Systematic risk and non-systematic risk

Systematic risk and non-systematic risk are two important concepts in finance and investment that help investors and analysts understand and manage the risks associated with different assets and portfolios. These risks are fundamental to the field of modern portfolio theory and the capital asset pricing model (CAPM).

1. Systematic Risk:

   • Definition: Systematic risk, also known as market risk or undiversifiable risk, is the inherent risk that is associated with the overall market or economy. It is the risk that cannot be eliminated through diversification because it affects all assets in a particular market or asset class.
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