Market risk, also known as systematic risk, affects the entire market and cannot be eliminated through diversification. Examples include economic recessions, geopolitical events, or market-wide changes in interest rates.
Currency risk (A): Can be diversified through exposure to multiple currencies.
Credit risk (B): Can be mitigated by spreading exposure across various credit profiles.
Liquidity risk (C): Can be addressed by diversifying into liquid assets.
References:
International Certificate in Wealth & Investment Management: Types of risk and strategies to mitigate them.
Modern Portfolio Theory and the distinction between systematic and unsystematic risk.
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