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A sudden change of oil price in the Middle East caused the value of your stocks...

A sudden change of oil price in the Middle East caused the value of your stocks to fall. List five types of risk that cause fluctuations in the prices and values of your investments.

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Answer #1

Types of risk that cause fluctuations in the prices and values of investments

  1. Credit Risk : This risk applies to debt instruments. It is the inability to pay the interest for the investment.
  2. Interest rate risk : It is the risk of losing money due to changes in the interest rate.
  3. Foreign exchange risk : This type of risk arises when there is changes in the exchange rate of the currency. International investments are likely to suffer the risk.
  4. Commodity risk : This is the risk arising due to the changes in the prices of the commodity.
  5. Market risk: When the price of the investment fall due to the market risk factors, it is called market risk.
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