market risk

Definition

Risk which is common to an entire class of assets or liabilities. The value of investments may decline over a given time period simply because of economic changes or other events that impact large portions of the market. Asset allocation and diversification can protect against market risk because different portions of the market tend to underperform at different times. also called systematic risk.

Use market risk in a sentence

The market risk was unavoidable so we did our best to lay the foundation of success by executing our business plan perfectly.

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Usually the degree of Market Risk that is associated to a particular class of assets is in direct porportion to the rate of return, which is why I like the high risks in a stock purchase to get a big return.

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By diversifying a retirement portfolio, an investor can mitigate market risk due to natural fluctuations and economic changes certain sectors of the market may experience.

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portfolio theory Fama-French three-factor model