Explain systematic risks in financial management, Financial Management

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Q. Explain Systematic Risks in Financial management?

Systematic risk in non-diversifiable and is associated with the securities Market as well as economic, sociological, political and legal considerations of the prices of all securities in the economy. The effect of these factor is to put pressure on all securities in such a way that the prices of all stocks will move in the same direction. For example during a boom Period, prices of all securities will rise and indicate that the economy is moving towards prosperity.

The systematic risk is further sub-divided into:

i) Market Risk

ii) Interest Rate Risk

iii) Purchasing Power Risk


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