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MaulanaRamadityaBahri ITYIELDS2020 Task7

Response Essay Format – 3rd IT YIELds 2020
: Maulana Ramaditya Bahri
Institution: Diponegoro University
: Assoc Prof. Dr. Imamudin Yuliadi
: Risk and return relationship
The important information that I obtained from the speaker is to
know about risk and return relationship. First, we must know
about total risk. The total risk is a variability in returns of a
security represents the total risk of that security. Systematic risk
and unsystematic risk are the two components of total risk. Thus
we write that Total Risk = Systematic risk + Unsystematic risk.
Next, there are a systematic risk.
The portion of the variability of return of a security that is caused
by external factors is called systematic risk. It’s also known as
market risk or non-diversifiable risk. Economic and political
instability economic recession, macro policy of the government, etc
affect the price of all shares systematically. Thus the variation of
retrun in shares, which is caused by these factors is called
systematic risk. And, there are the non-systematic risk too. The
return from a security sometimes varies because of certain factors
affecting only the company issuing such security like raw material
scarcity, labour strike, and management efficiency etc. when
variability of returns occurs because of such film-spesific factors,
it is known as unsystematic risk.