2006-12-06 05:16:15 · 2 answers · asked by Chris J 1 in Business & Finance ➔ Small Business
It's the portion of the total risk attributable to volatility of the market.
2006-12-06 05:29:23 · answer #1 · answered by NC 7 · 0⤊ 0⤋
1. Its how risky the market due to its volatility. In case of specific companies risk, its measured by beta which is a measure of how volatile the company stock is compared to the market volatility. Market is defined in this case as an universe of players diverse to represent the whole cross section of players. For analysis purposes, the market may also be defined as a set of comparable players.
2. The market risk refers to the risk that exists or affects the whole market, but not the specific companies. Its a risk inherent by virtue of being in that market.
Ex1. For importers of ore to China, any increase in import duty is a risk to all importers. Its a market risk. But if the importer suffers due to low quality supplies by the exporter, its only a business risk and not a market risk.
Ex1. For manuctuers of rain coats, lack of rains during the year is a market risk. But it the manufacturer faces labour unrest, it a business risk.
2006-12-06 05:38:49 · answer #2 · answered by mms 2 · 0⤊ 0⤋