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The main differences between systematic and unsystematic risk are described as follows:

1. Significance

Systematic risk: It is a part of the overall market risk that arises from external factors such as economic factors, political factors and sociological factors.

Unsystematic risk: It refers to the part of the risk that is related to the internal factors in the company and arises.

2. Nature

Systematic risk: It is a non-diversifiable risk that cannot be reduced or controlled by management.

Unsystematic risk: It is a diversifiable risk that management can reduce or control.

3. Factors

Systematic risk: it occurs due to the external factors.

Unsystematic risk: It occurs due to internal or organizational factors.

4. Influenced

Systematic risk: it affects the entire market and the economy.

Unsystematic risk: it only affects a specific industry or company organization.

5. Measurement

Systematic risk: It is measured using Security's beta. Beta is the indicator of systematic risk.

Unsystematic Risk: There is no such tool to indicate or measure this type of risk. It is calculated by subtracting the systematic risk from the total market risk.

6. Sources

Systematic risk: market risk, interest rate risk, purchasing power risk, etc. are the main sources of this type of risk.

Unsystematic risk: business risk, financial risk, bankruptcy risk are the main sources of unsystematic risk.

7. Examples

Systematic risk: interest rate changes, inflation, price changes, high unemployment, etc. are the common examples of these types of risk.

Unsystematic risk: High staff turnover, high operating costs, strikes in the company, etc. are examples of unsystematic risks.



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