1) when total risk assume to be equal to standard deviation of portfolio. for each stock in the sample during the period from July 2005 to December 2010. The market risk that is firm or industry-specific and is fixable is called unsystematic or idiosyncratic risk. Unsystematic Risk is any risk that is specific to a company as opposed to the entire economy or an entire industry. C. Unsystematic risk is rewarded when it exceeds the market level of unsystematic risk. Results From Factors Unique To The Firm. Learn vocabulary, terms, and more with flashcards, games, and other study tools. For instance, a firm may generate high profits in case of which the stock prices go up. Start studying Systematic vs. unsystematic risk. Commonly referred to as “specific risk”, unsystematic risk is not correlated to the performance of the overall market. Start studying Unsystematic Risk. And unsystematic risk = standard deviation of portfolio - syetamatic risk ( i.e total risk - systamatic risk) The major types of unsystematic risk are business risk, financial risk, and country risk. Unsystematic risk (aka diversifiable or firm-specific risk) is risk associated with individual events that affect a particular asset. Unsystematic risk, or specific risk, is that which is associated with a particular investment such a company's stock. The greater the diversification, the lower the residual risk in the overall position. Systematic risk is market wide risk, affected by the uncertainty of future economic conditions that affect all financial assets in the economy. C. Depends On Market Volatility. Unsystematic Risk Unsystematic risk is that portion of complete risk, which is unique to a company (industry); frequently referred to as residual or specific risk, it relates to particular economic aspects, which influence individual industries, firms, securities and projects, for instance the quality of management or equipment failure. For example, the telecommunication sector in India is going through disruption; most of the large players are providing low-cost services, which are impacting the profitability of small players with small market share. Systematic risk is the Systematic risk is uncontrollable whereas the unsystematic risk is controllable. By investing in a range of companies and industries, unsystematic risk can be drastically reduced through diversification.Synoyms include diversifiable risk, non-systematic risk, residual risk and specific risk. The Oxford Dictionary defines riskas the exposure to danger, harm, or loss. Unsystematic risk is the risk that is inherent in a specific company or industry. The possibility that an investment, most often bonds, will be adversely affected by an unanticipated and damaging event. We can lower it, mitigate it, and otherwise make sure it doesn't define our investments, but there will always be some risk whenever we are seeking to obtain a financial reward. This risk is associated with actions and decisions of the investment manager that could adversely impact one's investment in the fund he or she is managing. Risk that can't be eliminated through diversification, risk that can be mitigated/eliminated through diversification, risk that inflation will cause prices to increase and the dollar will not be able to buy the same amount of goods and services in the future, risk that an investor will not be able to reinvest income received from current investments at the same rate as the current investment rate, risk that changing interest rates will inversely impact equities and bonds, risk that a short-term, daily fluctuations in the market tend to bring all securities in the same direction, risk that the relationship between the price of a dollar and foreign currency changes, risk of conducting business within an industry, risk of political and economic stability/instability for a country that a company faces, risk that a company can't repay its debt obligations, risk or moral character of the executives running a company (extent to which executives break laws, regulations, or ethical standards), the amount of leverage the company is using in its capital structure, risk that a country may pass a law/regulation that impacts a particular industry. 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