Market risk, also known as systematic risk, is unavoidable in equity investments because it arise…
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Market risk, also known as systematic risk, is unavoidable in equity investments because it arises from factors that impact the entire market or economy.
These factors include:
Economic Factors: Changes in GDP, inflation, interest rates, or unemployment.
Political Factors: Government policies, elections, or geopolitical events.
Social Factors: Demographic changes, consumer behavior, or cultural shifts.
Since these factors influence all listed stocks to some extent, market risk cannot be eliminated through diversification or other investment strategies. It is inherent to investing in equities.