Systematic Risk
Risk that cannot be diversified is known the systematic risk.
This risk suffered by all companies irrespective of industry and nature of
business. This risk is also known as market risk. Systematic risk cannot be
eliminated or avoided by the companies because this risk basically associated
with economic condition of the country.
Example of Systematic
Risk
For example the growth rate of the economy has come down then
it will have impact on all industries sectors. The companies cannot avoid or
eliminate this risk because this risk is controlled by external forces.
How systematic Risk
measured
The systematic risk is measured with the help of Beta; if a
company beta value is more than one then it is considered to be more risky than
other company in the market. If beta value of company is less than one then
company is deemed to be less risky than market.
