Advantages Of Systematic Risks

1732 Words4 Pages

Systematic risk refers to the risk that faces all the firms operating in a particular industry. Systematic risk is not diversifiable as it comprises of risks that are unavoidable by all the companies in the sector. For instance,these hazards can include such as power shortages, inflation or change in government regulations in a country will definitely affect a company. It is therefore clear that there is no firm in the industry, which can prevent the systematic risks from occurring, neither can the company diversify from the risks (Marshall, 2015).Systematic risk is sometimes referred to as volatility and is measured using the risk factor, known as the Beta. Potential investors can use the weighted beta factor for the businesses operating within a particular sector, to determine whether an investment in a specific industry, is worthwhile (Marshall, 2015).
The Press Metal Bhd is a company based in Malaysia and mainly operates in two sectors. The sectors are the manufacturing of the iron sheets and the trading of the same. The …show more content…

The advantage of issuing the preference shares is that they do not have voting rights, and therefore, they cannot have any dilution effect on the votes of the shareholders. Preference shares can be redeemable, to mean that they can be repurchased back by the company, after a certain period, or they can be irredeemable, to indicate that the company can never repurchase them. Besides that , the preference shares can also be convertible, such that they can be changed into ordinary shares after a specified period. Advantages of preference shares can be that: such shares are given priority, in the distribution of a company’s assets in case of liquidation, the shareholders of such shares, enjoy the preferred dividend, which is issued at a constant rate per

Open Document