Types of Investment Risk
Free CFP Exam lesson in Investment Planning. 14 min read, ~2,148 words.
Systematic risk (market-wide, nondiversifiable): interest rate, inflation, currency, reinvestment, political. Unsystematic risk (company-specific, diversifiable): business, financial, credit, liquidity, concentration. Beta measures systematic risk only; standard deviation measures total risk. R-squared 0.70 = use Treynor (beta); R-squared < 0.70 = use Sharpe (std dev). Interest rate risk and reinvestment risk move...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- D.28
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