The systematic risk principle states that the expected return on a risky asset depends only on the asset’s <u>market </u>risk.
<h3>What are
systematic risk principles?</h3>
According to the systemic risk concept, the expected return on an asset is solely determined by its systematic risk. As a result, regardless of how much overall risk an asset carries, just the systematic part is significant in estimating the expected return (including risk premium) on such asset.
Market risk is a kind of systematic risk that affects the entire market. Because it cannot be diversified and distributed, the investor is compensated for it.
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The current market price of the bond is 103% of their par value
What percentage is the bond price compared to its par value?
The market bond convention is to quote the price at which the bond can be bought or sold in the market as a percentage of its par value.
The simple approach is to add a percentage sign to any bond price you are given, which means that 97 price means the bond price is 97% of par value.
In the same vein, 103 price means the quoted price of the bond is 103% of the par value of the bond/
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