Assume all of the stocks in a given industry fall as a result of an announcement about the general health of the economy. This is an example of systematic risk.

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Systematic risk refers to the risk that affects an entire market or market segment, such as changes in economic, political, or social factors. The scenario described involves an economic announcement impacting all stocks in a given industry, which is a classic example of systematic risk.

Assume All of the Stocks in a Given Industry Fall