Question

What are at examples of systemic risk and unsystemic risk that might affect shareholder returns for investors in HOME Depot

Answer 1

The systematic and unsystematic risk affecting the investors in Home Depot is :

The systematic risk is same for all investors and affect all the companies in a similar way. The factors affecting the economy like, changes in interest rates, the rise in unemployment rates. The risk of natural disasters, the availability of financing, the uncertainty in the housing markets and home decor market.

The unsystematic risk is the risk that is unique to Home Depot , these risks are controllable and mitigated.

• The changing tastes and preferences of consumers.
• A disruption in the logistics or supply chain network.
• Availability of additional financing, in favourable terms.
• Retaining a good qualified supplier.
• The employees going on a strike due to low wages paid.
• The changing weather conditons can also be threat for safe transportation of goods.