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Zorluk: Çok zorNon-Systematic and Credit Risks

A wealth management advisory team is reviewing a client's fixed-income and equity holdings to distinguish non-systematic risks from systematic market forces. Which of the following statements accurately describe non-systematic and credit risks in this context?

  1. Credit risk represents the likelihood that an issuer will fail to make timely interest or principal payments, a risk that can be substantially reduced through portfolio diversification.Cevap
  2. A downgrade in a corporate issuer's credit rating caused by sudden internal operational difficulties represents a non-systematic risk event.Cevap
  3. C
    Concentrating debt holdings across fifty different corporate issuers within a single industry sector eliminates business risk for the portfolio.
  4. D
    U.S. Treasury bonds possess significant credit risk, making their secondary market price volatility primarily driven by default probability rather than interest rate changes.

Cevap

Credit risk is the risk of issuer default on interest or principal payments that can be reduced through diversification, and a rating downgrade of a specific corporate issuer due to operational issues is a non-systematic risk event.
The correct options accurately define credit risk as the risk of issuer default on interest or principal payments which can be mitigated through asset diversification, and correctly classify a credit rating downgrade driven by company-specific operational difficulties as a non-systematic risk event.

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1
Distinguish between systematic and non-systematic risk characteristics.
Non-systematic risk is company- or issuer-specific and can be minimized through broad diversification across different issuers and industry sectors.
Understanding diversifiability is fundamental to evaluating credit risk and business risk.
2
Analyze the definition and mitigation of credit risk.
Credit risk measures the probability that a debt issuer defaults on scheduled payments. Spreading capital across varied issuers reduces exposure to single-issuer default.
This confirms that statements describing credit risk as an issuer-specific, diversifiable risk are correct.
3
Evaluate corporate credit rating downgrades and industry concentration.
Operational issues affecting a single firm are non-systematic events. However, holding multiple issuers within one industry fails to mitigate sector-wide business risk.
Issuer-specific operational events are non-systematic, but sector concentration leaves sector-wide risk unmitigated.
4
Evaluate U.S. Treasury debt risk factors.
U.S. Treasuries carry virtually zero credit risk, so secondary market price fluctuations stem from interest rate changes rather than default risk.
Conflating U.S. Treasury interest rate risk with credit risk is a common misconception.

Anahtar Kavram

Non-systematic risks (such as credit risk and business risk) are unique to specific issuers or sectors and can be mitigated through broad diversification, unlike systematic risks like interest rate risk.
Tahmini Süre:1m 30s
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Non-Systematic and Credit Risks

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