systematic vs. unsystematic risk

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heavenkid's picture

classify the following events as mostly systematic or mostly unsystematic. is the distinction clear in every case?

1, short-term interest rates increase unexpectedly - (unsystematic)

2, the interest rate a company pays on its short-term debt borrowing is increased by its bank (systematic) )

3, oil prices unexpectedly decline- (unsystematic )

4, an oil tanker ruptures, creating a large oil spill- (unsystematic )

5, a manufacturer loses a multimillion-dollar product liability suit.-(systematic )

6, a european union decision substantially broadens producer loability for injuries suffered by product users.-(systematic )



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Dreary's picture

Reverse most of them and you’ll have them right… systematic affects the whole market, unsys is specific to the company/stock/commodity, etc.

1recho's picture

Just goes to show finance guys suck at grammar :-)

If they called it “systemic risk” I’d remember the distinction better.

“Systematic” to me means “organized”, “orderly”, etc. Nothing to do with how many people it affects.

One Rec Ho

Dreary's picture

systemic is another ball game.

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