Market risk is the primary risk when investing in stocks and is crucial for making informed investment decisions.
Market risk is the greatest risk when investing in stocks. Market risk is associated with the overall market movement and can affect the value of a stock regardless of the specific characteristics of the company issuing it. This risk is systematic and cannot be diversified away.
Investors use tools like the capital asset pricing model (CAPM) and the arbitrage pricing theory (APT) to assess and manage market risk. Understanding and evaluating market risk is crucial for making informed investment decisions in the stock market.
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