ARM 56 - Chapter 9
Market Risk - correct answer ✔Uncertainty about an investment's future
value because of potential changes in the market for that type of investment
Interest Rate Risk - correct answer ✔The risk that a security's future value
will decline because of changes in interest rates
Exchange Rate Risk - correct answer ✔Uncertainty about an investment's
value because of potential changes in the exchange rate between currencies
Liquidity Risk - correct answer ✔The risk that an asset cannot be sold on
short notice without incurring a loss
Credit Risk - correct answer ✔The risk that customers or other creditors will
fail to make promised payments as they come due
Price Risk - correct answer ✔The potential for a change in revenue or cost
because of an increase or a decrease in the price of a product or an input
Forward Contract - correct answer ✔A contract that obligates one party to
buy and another party to sell a specific financial instrument or physical
commodity at a specified future date and price
Call Option - correct answer ✔An option to buy a set amount of the
underlying security at any time within a specified period
Put Option - correct answer ✔An option giving the holder the right to sell a
set amount of the underlying security at any time within a specified period
Market Risk - correct answer ✔Uncertainty about an investment's future
value because of potential changes in the market for that type of investment
Interest Rate Risk - correct answer ✔The risk that a security's future value
will decline because of changes in interest rates
Exchange Rate Risk - correct answer ✔Uncertainty about an investment's
value because of potential changes in the exchange rate between currencies
Liquidity Risk - correct answer ✔The risk that an asset cannot be sold on
short notice without incurring a loss
Credit Risk - correct answer ✔The risk that customers or other creditors will
fail to make promised payments as they come due
Price Risk - correct answer ✔The potential for a change in revenue or cost
because of an increase or a decrease in the price of a product or an input
Forward Contract - correct answer ✔A contract that obligates one party to
buy and another party to sell a specific financial instrument or physical
commodity at a specified future date and price
Call Option - correct answer ✔An option to buy a set amount of the
underlying security at any time within a specified period
Put Option - correct answer ✔An option giving the holder the right to sell a
set amount of the underlying security at any time within a specified period
