Questions and CORRECT Answers
Market Risk - CORRECT ANSWER - Also know as sytematic risk, the potential for
investment losses due to adverse movement in financial markets
unsystematic risk - CORRECT ANSWER - Risks that are not shared with a wider market or
industry
Political risk - CORRECT ANSWER - The risk that political decisions, events, or conditions
will significantly affect the profitability of an investment
Inflation risk - CORRECT ANSWER - The risk that rising inflation will decrease the real
value of an investment or asset
Regulatory risk - CORRECT ANSWER - Refers to the potential negative impact on a
business or industry due to changes in laws, regulations or policies
Business cycle risk - CORRECT ANSWER - The risk that a companies profits or an
investments returns will be negatively affected by fluctuations in the economy, specifically
during periods of economic contraction or recession
Marketability risk/liquidity risk - CORRECT ANSWER - The risk that an investment cannot
be easily sold or that it will be sold at a significant discount if it is sold
Market volatility risk - CORRECT ANSWER - The risk of an adverse change is price, due to
changes in the volatility of a factor affecting that price
Global investment risk - CORRECT ANSWER - The risk surrounding investment in foreign
markets or assets, encompassing a range of factors that can lead to financial losses