What type of risk refers to the risk associated with overall market movements?

The type of risk that refers to the risk associated with overall market movements is systematic risk. This concept encapsulates risks that affect the entire market or a significant portion of it, such as economic downturns, interest rate changes, political instability, and natural disasters. Systematic risk is inherent to the entire market and cannot be eliminated through diversification of investments. Investors must understand this risk because it impacts the overall performance of their portfolio regardless of the individual securities contained within it.

Non-systematic risk, on the other hand, pertains to risks specific to a particular company or industry, which can often be mitigated by diversifying holdings. Credit risk relates to the potential that a borrower will fail to meet their debt obligations, which is distinct from market-wide fluctuations. Investment risk is a broader term that encompasses various types of risks involved in investing, including both systematic and non-systematic risks, but does not specifically refer only to market movements. Thus, systematic risk is the correct term for risks arising from market-wide factors.