Systematic Risk Definition & Example - InvestingAnswers
2020年9月29日 · Systematic risk can also be thought of as the opportunity cost of putting money at risk. For example, Option A is an investment of $100 in a risk-free, FDIC-insured Certificate of deposit. Option B is an investment of $100 in SPY, the ETF that charts the S&P 500 Index .
Relevant Risk Definition & Example - InvestingAnswers
2019年10月1日 · Also called systematic risk or non-diversifiable risk, relevant risk is the fluctuation of returns caused by the macroeconomic factors that affect all risky assets. Diversifiable risk is the risk of something going wrong on the company or industry level, such as mismanagement, labor strikes, production of undesirable products, etc.
Market Risk Definition & Example - InvestingAnswers
2019年10月1日 · How Does Market Risk Work? Market Risk is also referred to as systematic risk or non-diversifiable risk. Market risk is comprised of the “unknown unknowns” that occur as a result of everyday life. It is unavoidable in all risky investments. It can also be thought of as the opportunity cost of putting money at risk.
Idiosyncratic Risk Definition & Example - InvestingAnswers
2019年10月1日 · Why Does Idiosyncratic Risk Matter? Investors often don’t appreciate that some of the factors that affect their investments have little to do with their actual investment choices -- these systematic risks are borne by all investors. Accordingly, systematic risks are what influence asset allocation; idiosyncratic risk influences stock picking.
Specific Risk Definition & Example - InvestingAnswers
2019年10月1日 · Specific risk should not be confused with systematic risk, which is the risk of an event that would directly affect the entire market (e.g. recession, etc.) Why Does a Specific Risk Matter? Since specific risk affects only a type of asset in a market and not all assets, specific risk can be mitigated by diversification .
Delisting Definition & Example - InvestingAnswers
2020年9月29日 · Although not all companies are delisted for negative reasons, delisting prevents exchanges from being filled with shoddy securities from issuers that may be on their last leg. By ensuring that all issuers maintain high administrative standards, exchanges are helping to reduce the systematic risk associated with the market and protect investors.
Call Risk Definition & Example - InvestingAnswers
2021年6月1日 · Call risk leads to reinvestment risk. In our example, XYZ Company's call provision means bondholders no longer have the promise of 10 years of 10% interest payments. So, if XYZ Company does call its bonds , bondholders will receive their principal back (plus a call premium ), but then they will have to reinvest that money in a lower interest ...
Underwriting | Definition & Examples - InvestingAnswers
2020年11月12日 · The underwriting process is a detailed and systematic analysis of a potential borrower's credit-worthiness, including employment history, salary, financial statements and performance, publicly available information, and independent credit reports. The underwriting process is intended to determine the credit needs, the quality of the collateral ...
Abnormal Rate of Return Definition & Example - InvestingAnswers
2020年8月12日 · The greater part of the CAPM formula (all but the abnormal return factor) determines the rate of return on a certain security or portfolio given certain market conditions. note that two similar portfolios could carry the same amount of risk (beta) but because of variations in abnormal rate of return, one might have greater returns than the ...
Foreign-Exchange Risk Definition & Example - InvestingAnswers
2020年10月5日 · Foreign-exchange risk is similar to currency risk and exchange-rate risk. Foreign-exchange risk is the risk that an asset or investment denominated in a foreign currency will lose value as a result of unfavorable exchange rate fluctuations between the investment's foreign currency and the investment holder's domestic currency.