ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Risk is any uncertainty with respect to your investments that has the potential to negatively impact your financial welfare. For example, your investment value might rise or fall because of market conditions (market risk).
Detailed explanation-2: -The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you may make more money by carefully investing in higher risk assets, such as stocks or bonds, than if limit yourself to less risky assets.
Detailed explanation-3: -A risk premium is the investment return an asset is expected to yield in excess of the risk-free rate of return. Investors expect to be compensated for the risk they undertake when making an investment. This comes in the form of a risk premium.
Detailed explanation-4: -Systematic Risk – The overall impact of the market. Unsystematic Risk – Asset-specific or company-specific uncertainty. Political/Regulatory Risk – The impact of political decisions and changes in regulation. Financial Risk – The capital structure of a company (degree of financial leverage or debt burden) More items •04-Mar-2023