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Systematic Risk |
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The risk inherent to the entire
market or entire market segment. Also known as "un-diversifiable
risk" or "market risk." interest rates,
recession and wars all represent sources of systematic
risk because they will affect the entire market and cannot
be avoided through diversification. Whereas this type
of risk affects a broad range of securities, |
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unsystematic risk affects a very
specific group of securities or an individual security.
Systematic risk can be mitigated only by being hedged. |
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S&P500 |
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Standard & Poor's Index of
the New York Stock Exchange. A basket of 500 stocks that
are considered to be widely held. The S&P 500 index
is weighted by market value, and its performance is thought
to be representative of the stock market as a whole. |
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