Essay on Finance Risk Guide
1. What is risk?
It is the chance that an investment's actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment.
2. What is market risk?
Market risk is the possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets.
3. Mention and explain the factors of risk.
* Exchange rate - the appreciation of the dollar has been a topic of irrigation for many country; for example in the case of the US-dollar vs …show more content…
* Risks of country - such as insecurity within a country, can influence the decision that investors to enter the country and invest in taking uncertainty that can go with what they have invested
4. Which are the types of financial risk?
Market risk involves the risk of changing conditions in the specific marketplace in which a company competes for business.
Credit risk is the risk businesses incur by extending credit to customers. It can also refer to the company's own credit risk with suppliers.
Liquidity risk includes asset liquidity and operational funding liquidity risk. Operational funding liquidity is a reference to daily cash flow.
Operational risks refer to the various risks that can arise from a company's ordinary business activities. The operational risk category includes lawsuits, fraud risk, personnel problems and business model risk, which is the risk that a company's models of marketing and growth plans may prove to be inaccurate or inadequate.