CLARIZA B.

AGUSTIN BSBA-FM 3rd Year

FME11 Report:

2 Types of Risk - Systematic

Systematic - It refers the inherent to entire market or market segment.

- In the other hand is "uncontronable".

- It is also known as "Undiversifiable Risk" , "Votality" or Market Risk ",

affects the overall market.

Undiversifiable Risk - is the possibility that there will be a change in the price security.

Votality and Market Risk - is the standard deviation of changes in the prices of stocks,
currencies or commodities.

Systematic Risk can be categorized into 3 categories:

* Interest Rate Risk > which is associated with increases and decreases
in the interest rate.

* Market Risk > which is associated with constant fluctuations in the

market.
* Inflationary Risk > which where there is an excess of demand over
supply for goods.

example: Bond Markets -> when the expected inflation increases, It increases
the nominal rates.

There are two basic types of risks:

1) Systematic Risk - It will affect a large number of assets.

2) Unsystematic Risk - It will affect the single asset or a small group of

assets.