ECONOMICS
FINANCIAL MARKETS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Yes, I understand this from the notes
|
|
|
No, I don’t understand this from the notes
|
|
|
No, I don’t understand this, as I have not read the notes
|
|
|
None of the above
|
Detailed explanation-1: -Systemic risk (also called macroprudential) regulation seeks to prevent both future financial crises and modest breakdowns in the smooth functioning of specific financial markets or sectors. It can be contrasted with the traditional microprudential regulatory focus on an individual institution’s solvency.
Detailed explanation-2: -Systematic risk is that part of the total risk that is caused by factors beyond the control of a specific company or individual. Systematic risk is caused by factors that are external to the organization. All investments or securities are subject to systematic risk and, therefore, it is a non-diversifiable risk.
Detailed explanation-3: -Systematic Risk – The overall impact of the market. Unsystematic Risk – Asset-specific or company-specific uncertainty. Political/Regulatory Risk – The impact of political decisions and changes in regulation.
Detailed explanation-4: -Systemic risk refers to the risk of a breakdown of an entire system rather than simply the failure of individual parts. In a financial context, it denotes the risk of a cascading failure in the financial sector, caused by linkages within the financial system, resulting in a severe economic downturn.