The impact of economic, political and social changes is system-wide and that portion of total variability in security returns caused by such system-wide factors is referred to as systematic risk. Systemic risk encompasses the overall market’s impact of a recession, inflation, and interest rate changes, and as a result, it is extremely volatile and cannot be mitigated through diversification.
Systematic risk can be further subdivided into
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Interest rate risk
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Market risk
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Purchasing power risk