Question

put this in word for for a 10th grader Systematic (market) risk: This is the risk that affects the entire market or economy—like a recession, pandemic, or major financial crisis. Even a well-diversified portfolio can lose value in a broad market downturn because all assets can be impacted simultaneously. Diversification lowers but does not remove this kind of risk.

Answer 1

Systematic (market) risk is the kind of risk that hits the whole economy at once. Examples are a recession, a pandemic, or a big financial crash. Because it affects almost every investment, even a well-diversified portfolio can lose value when the market drops. Having different investments helps reduce this risk, but it can’t get rid of it entirely.