What type of investment risk is considered to be unavoidable for all securities?

Market risk, often referred to as systematic risk, is the type of investment risk that is considered unavoidable for all securities. This risk arises from fluctuations in the overall market and affects all investments to varying degrees, regardless of the individual characteristics of each security. Factors contributing to market risk include economic changes, political events, and overall market sentiment, which can influence the performance of the entire market rather than specific sectors or individual securities.

Since market risk is inherent in the market environment and cannot be eliminated through diversification, it remains a constant factor that investors must consider. Conversely, specific risk, bankruptcy risk, and interest rate risk are types of risks that can often be mitigated or avoided through various strategies, such as diversification or careful selection of securities. This distinction highlights why market risk is viewed as a fundamental and unavoidable aspect of investing in securities.