A theory stating that only systemic risks can affect the expected returns of a well diversified portfolio (for example the effects of the wider economy). Unsystemic risks are considered irrelevant because the process of diversification eliminates that risk (for example the profits of a single company).
Related information about systematic risk principle:
- Systematic Risk Principle - Financial Dictionary - The Free Dictionary
Only the systematic portion of risk matters in large, well-diversified portfolios. Thus, expected returns must be related only to systematic risks.
- What is systematic risk principle? definition and meaning
Definition of systematic risk principle: A theory stating that only systemic risks can affect the expected returns of a well diversified portfolio (for example the effects ...
- Systematic risk principle
Similar financial terms. Systematic risk. The systematic risk of an asset or portfolio is the risk that cannot be diversified away. Unsystematic risk. Also called the ...
- Return, Risk, and the Security Market Line
The Systematic Risk Principle. • What determines the size of the risk premium on a risky asset? • The systematic risk principle states: The expected return on an ...
- CHAPTER 13 CHAPTER 13 Return, Risk, and the Security Market ...
SYSTEMATIC RISK PRINCIPLE. b 6. The _____ ..... The systematic risk principle implies that the _____ an asset depends only on that asset's systematic risk.
- Systematic Risk Principle Definition
The definition of the financial term systematic risk principle. Find more finance definitions inside the PFhub glossary your Personal Finance Hub.
- RRER RE
Systematic Risk Principle. • There is a reward for bearing risk. • There is not a reward for bearing risk unnecessarily. • The expected return on a risky asset ...
- * Systematic risk - (Business): Definition
Systematic risk principle. Only the systematic portion of risk matters in large, well- diversified portfolios. The expected returns must be related only to systematic ...