Systematic Risk - Systematic risk refers to the risk faced by the entire market, influenced by macroeconomic factors such as GDP growth rate, inflation rate, and interest rates, which can significantly impact stock prices [1] - Economic expansion typically leads to increased corporate profits and rising stock markets, while economic recession can result in declining revenues and profits, putting downward pressure on stock prices [1] - Political stability fosters healthy stock market development, whereas political turmoil increases market uncertainty and investor confidence may be adversely affected [1] Market Risk - Market risk arises from price fluctuations in the stock market, primarily driven by changes in supply and demand [2] - Investor sentiment and psychological expectations can exacerbate market risks, leading to market bubbles during optimistic periods and panic sell-offs during pessimistic periods [2] - Non-systematic risk, which is specific to individual companies or industries, is also a significant concern, with operational risks being a key component [2] Financial Risk - Financial risk is influenced by a company's financial condition and capital structure, with high debt levels leading to significant interest expenses and repayment pressures [3] - Poor management or strategic decisions can result in profit declines and stock price drops, highlighting the importance of operational efficiency and market competitiveness [2][3] - Investors are encouraged to assess risks comprehensively, considering systematic, market, and non-systematic risks to make informed investment decisions [3]

Group 1 - Non-systematic risk, also known as specific risk or diversifiable risk, is defined as the risk arising from unique factors related to a specific entity or industry, affecting only individual companies or sectors without widespread impact on the entire market or economy [3] - Key characteristics of non-systematic risk include its individual nature, the ability to diversify it through varied investments, and its independence from overall market fluctuations [3][4] - Common types of non-systematic risk include operational risk, financial risk, credit risk, industry risk, liquidity risk, and management risk, each stemming from specific issues within companies or sectors [6][7] Group 2 - Non-systematic risk can be mitigated through strategies such as diversification across different industries and asset types, thorough fundamental analysis of companies, staggered investment maturities, and the use of derivatives for hedging [7] - The comparison between non-systematic and systematic risk highlights that non-systematic risk affects individual companies or sectors, while systematic risk impacts the entire market or economic system [4]