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  • Types of Risk 2

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    This document discusses three types of risks: 1) Interest rate risk, which arises from variability in interest rates over time and affects debt securities with fixed interest rates. 2) Market risk, also known as price risk, which is the possibility that the price of shares, commodities, or investments may decline or fall in the future. 3) Reinvestment rate risk, which occurs when interest rates fall and existing investments must be reinvested at lower rates.

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    This document discusses three types of risks: 1) Interest rate risk, which arises from variability in interest rates over time and affects debt securities with fixed interest rates. 2) Market risk, also known as price risk, which is the possibility that the price of shares, commodities, or investments may decline or fall in the future. 3) Reinvestment rate risk, which occurs when interest rates fall and existing investments must be reinvested at lower rates.

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    66 views1 page

    Types of Risk 2

    Uploaded by

    gaurav112011
    This document discusses three types of risks: 1) Interest rate risk, which arises from variability in interest rates over time and affects debt securities with fixed interest rates. 2) Market risk, also known as price risk, which is the possibility that the price of shares, commodities, or investments may decline or fall in the future. 3) Reinvestment rate risk, which occurs when interest rates fall and existing investments must be reinvested at lower rates.

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    of 1

     Interest rate risk,

     Market risk and


     Purchasing power or inflationary risk.

    1. Interest rate risk

    Interest-rate risk arises due to variability in the interest rates from


    time to time. It particularly affects debt securities as they carry the
    fixed rate of interest.

    The types of interest-rate risk are depicted and listed below.

    Price Risk
    Price risk arises due to the possibility that the price of the shares, commodity,
    investment, etc. may decline or fall in the future.

    Reinvestment rate risk

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