What are investment risks?
According to the manual, investment risk refers to the idea that an investment will not work as
expected, that its real return will deviate from the expected return. (Siegal & Yacht, 2009). In
addition, each investment has its level of risk and people always think risk described in terms of
loss while it can be considered the wrong way of investing goes to the opposite of what is
expected.
There are different kinds of investment which are: credit risk- liquidity risk- inflation risk.
Credit risk:
It applies to debt securities, such as bonds. This happens when the company that issued the
bonds will be in financial difficulty and will not be able to pay the interest.
Liquidity risk:
In this type of risk, you are unable to sell your investment at a fair price when you want to.
Inflation risk:
This is the risk associated with loss in purchasing power because the value of the speculation
does not keep up with inflation.
Investors for the most part consider investments with high dangers as great while those with low
dangers as Unfavorable which produce fewer returns. A portion of the dangers are financial,
modern, resource, market, organization, and firm-explicit dangers (Siegel and Yacht, 2009).
Reference:
Siegal, R. &Yacht, C. (2009). Personal Finance. SaylorFoundation. Licensed under Creative
Commons CC BY-NC-SA 3.0
According to the manual, investment risk refers to the idea that an investment will not work as
expected, that its real return will deviate from the expected return. (Siegal & Yacht, 2009). In
addition, each investment has its level of risk and people always think risk described in terms of
loss while it can be considered the wrong way of investing goes to the opposite of what is
expected.
There are different kinds of investment which are: credit risk- liquidity risk- inflation risk.
Credit risk:
It applies to debt securities, such as bonds. This happens when the company that issued the
bonds will be in financial difficulty and will not be able to pay the interest.
Liquidity risk:
In this type of risk, you are unable to sell your investment at a fair price when you want to.
Inflation risk:
This is the risk associated with loss in purchasing power because the value of the speculation
does not keep up with inflation.
Investors for the most part consider investments with high dangers as great while those with low
dangers as Unfavorable which produce fewer returns. A portion of the dangers are financial,
modern, resource, market, organization, and firm-explicit dangers (Siegel and Yacht, 2009).
Reference:
Siegal, R. &Yacht, C. (2009). Personal Finance. SaylorFoundation. Licensed under Creative
Commons CC BY-NC-SA 3.0
