The following points highlight the seven main types of risk on investment. The types are: 1. Interest Rate Risk / Market Risk 2. Credit Risk / Counter-Party Risk 3. Call Risk / Prepayment Risk 4. Put Risk 5. Yield Curve Risk 6. Inflation Risk 7. Sovereign Risk. 1. Interest Rate Risk / Market Risk: If we talk of fixed income [...]
The following article will guide you about how to mitigate interest rate risk. Introduction: Of the two components of interest rate risk, price risk can have a sudden and dramatic impact on your fixed income portfolio. The reinvestment risk is slow and long drawn in its effects. In the long run, interest rate scenarios change and you will most certainly [...]
In this article we will discuss about risk and return on investment. Risk and Required Return: The expected rate of return of an investment reflects the return an investor anticipates receiving from an investment. The required rate of return reflects the return an investor demands as compensation for postponing consumption and assuming risk. The required rate of return of an [...]