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sir
June 14 question 3 part C
tell me what each term means
and kindly tell me which chapter they come fromI am a bit puzzled by your asking, because the examiners own answer explains the terms.
Systematic risk is risk due to general economic factors (such as the rate of inflation, exchange rate movements) – this cannot be diversified away.
Unsystematic risk is risk due to factors within the specific company (such as poor labour relations) – this can be diversified away.They are a fundamental part of understanding the capital asset pricing model and are explained in detail in the chapters on CAPM and the free lectures that go with the notes.
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