If securities firms are subject to systemic risk, this means that their main source of risk is a rise in interest rates, which may cause the value of their bond holdings to decline.

Question

Quizplus · Accepted Answer

Systemic risk refers to the risk of collapse of an entire financial system or entire market, due to the failure of a single entity or group of entities, which can lead to a crisis when the overall market or economy performs poorly. It is not limited to the risk associated with rising interest rates affecting bond holdings.

If Securities Firms Are Subject to Systemic Risk, This Means