Match each category of systematic risk with the scenario or market dynamic that primarily illustrates its impact on an investor's portfolio.
- Interest Rate RiskA portfolio of long-term fixed-income securities experiences a drop in market value following an economy-wide rise in benchmark interest rates.
- Purchasing Power RiskA retired investor holding fixed corporate bond payments experiences a loss in the real buying power of their income due to rising CPI inflation.
- Currency RiskA U.S. investor holding European equity securities sees localized investment gains reduced when converting euros back to U.S. dollars as the dollar strengthens.
- Market RiskA broad equity portfolio containing shares across 100 major domestic companies across multiple sectors declines during a macroeconomic recession.
Cevap
Interest Rate Risk matches the price decline of long-term fixed-income securities when benchmark rates rise. Purchasing Power Risk matches the loss in real buying power of fixed bond income caused by rising CPI inflation. Currency Risk matches the reduction in converted foreign investment returns caused by a strengthening U.S. dollar. Market Risk matches the broad decline in a well-diversified equity portfolio caused by a macroeconomic recession.
Each risk subtype is accurately paired with its driving macroeconomic factor: Interest Rate Risk directly causes bond market values to fall when rates rise; Purchasing Power Risk reduces the real goods and services fixed interest payments can purchase; Currency Risk diminishes foreign asset returns when converted into a stronger domestic currency; and Market Risk impacts general market valuations across diversified stock portfolios.
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Anahtar Kavram
Systematic risks are non-diversifiable macroeconomic risks—including market risk, interest rate risk, purchasing power risk, and currency risk—that affect overall asset classes or financial markets.
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