ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Market risk. The risk of investments declining in value because of economic developments or other events that affect the entire market.

Detailed explanation-2: -Types of Risks Widely, risks can be classified into three types: Business Risk, Non-Business Risk, and Financial Risk.

Detailed explanation-3: -Portfolio diversification is the process of selecting a variety of investments within each asset class, which can help those looking for how to minimize their investment risk. Diversification across asset classes may also help lessen the impact of major market swings on your portfolio.

Detailed explanation-4: -Risk reduction deals with mitigating potential losses by reducing the likelihood and severity of a possible loss. For example, a risk-avoidant investor who is considering investing in oil stocks may decide to avoid taking a stake in the company because of oil’s political and credit risk.

Detailed explanation-5: -strategic risk-eg a competitor coming on to the market. compliance and regulatory risk-eg introduction of new rules or legislation. financial risk-eg interest rate rise on your business loan or a non-paying customer. operational risk-eg the breakdown or theft of key equipment.