The risk of loss owing to changes in the general level of market prices or interest rates, arising from positions in interest rate, equities, foreign exchange and commodities is:

Question

Quizplus · Accepted Answer

General market risk, also known as systematic risk or non-diversifiable risk, is the risk that affects the overall market and cannot be mitigated through diversification. It is caused by macroeconomic factors such as changes in interest rates, inflation, and world events that affect the entire market. Specific risk, on the other hand, is the risk that is unique to a specific company or industry and can be diversified away by holding a portfolio of different assets. Beta is a measure of an asset's sensitivity to changes in the overall market, and total risk is the sum of specific risk and general market risk.

The Risk of Loss Owing to Changes in the General