NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Risk and Return
Which of the following risks is classified as systematic risk?
A change in RBI policy interest rates is systematic risk. It affects the whole market and cannot be diversified away. Strikes, promoter fraud and loss of a key customer are specific to one company and can be reduced through diversification.
- AA strike at one company's factory
- BChange in RBI policy interest rates affecting all securitiesCorrect
- CFraud by a company's promoter
- DLoss of a key customer by one firm
Explanation
Systematic risk arises from market-wide factors such as interest rates and cannot be removed by diversification. The other three are company-specific and diversifiable.
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