From 11:00PM PDT on Friday, July 1 until 5:00AM PDT on Saturday, July 2, the Shmoop engineering elves will be making tweaks and improvements to the site. That means Shmoop will be unavailable for use during that time. Thanks for your patience!
We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Market Risk

Definition:

There are lots of risks when you invest money; two of the most common categories of risk are

  • unsystematic risk
  • systematic risk (also known as market risk)

Unsystematic risk refers to risks linked to a specific stock or security. So you buy stocks in your dad's ice cream company, and the company goes bankrupt (who knew pork rind ice cream would prove so unpopular?). That's unsystematic risk, and you can help reduce some of your risk by diversifying your investments and at least investing in some companies that are likely to do well.

Market risk affects a whole market, and it happens because of things like terrorist attacks, natural disasters, political upheaval, and zombie apocalypses. There's no real way to protect yourself against market risk.

Just take your vitamins and hope you don't get bitten by the walking dead, we guess.