Define 'systematic risk'.

Systematic risk refers to the risk that affects the entire market or a significant market segment, rather than being tied to a specific company or industry. This type of risk is influenced by factors that impact the economy as a whole, such as interest rates, inflation, political instability, and changes in national or global economic conditions. Because systematic risk is inherent in the market, it cannot be mitigated through diversification, meaning that holding a diversified portfolio does not eliminate this risk.

In contrast, the other options focus more on specific risks. The first option relates to unsystematic risk, which is unique to a particular company or industry and can be mitigated through diversification. The second choice also pertains to individual investment decisions rather than broader market risks. The last option describes foreign or geopolitical risk but does not encompass the wider factors affecting all investments in a market.

Overall, understanding systematic risk is crucial for investors as it helps them grasp the broader market forces that can impact their investment portfolios.