Please Explain

Can someone please explain the differences between all the following different types of risk: Market Risk Unsystematic Risk Systematic Risk Firm Specific Risk Undiversifiable Risk THe question i got this from states: Which of the following types of risk are essentially the same: market and unsystematic total and variance of return (the answer which is fine) sytematic risk and firm specific risk Undiversifiable and unsystematic risk Any quick thought would be much appreciated.

you should probably just read p 109-112 in schweser book 4 market risk = systematic risk = non-diversifiable risk firm specific risk = unsystematic risk = non-diversifiable risk market risk is the risk you should be compensated for because it is the risk which cannot be diversified away.

Hi, Thanks I got it from your post. It’s all my head but just needed a bit of clarification. Got one more question: What’s the difference bettween Order drive and Price driven markets. Is an order driven market just a Market Maker market? and a price driven market a normal market?

Order driven - dealer market price driven auction market

Posted by: slave (IP Logged) [hide posts from this user] Date: November 27, 2007 09:51AM you should probably just read p 109-112 in schweser book 4 market risk = systematic risk = non-diversifiable risk firm specific risk = unsystematic risk = non-diversifiable risk --------------------------------------------- I thought unsystematic risk is the diversifiable risk?

systematic risk (Beta) is undiversifiable. this is market risk - think CAPM unsystematic risk (st deviation) is firm specific risk and is diversifiable.