Which of the following risks is also known as market risk?  a.interest rate risk   b. systematic risk c. foreign exchange rate risk   d. inflation rate risk

Q: Which of the following provides the link between interest rate parity and unbiased forward rates? A.…

A: Uncovered Interest rate Parity As per uncovered interest rate parity theory the difference in…

Q: What is foreign exchange FX risk?

A: Foreign exchange risk: It alludes to the misfortunes, due to currency or money changes, that a…

Q: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: Which of the following risks can be eliminated through diversification? a. Systematic risk b.…

A: Idiosyncratic risk is a risk for a particular investment or company. It is also called unsystematic…

Q: In the single-index model represented by the equation ri = E(ri) + βiF + ei, the term ei represents…

A: ei

Q: A. Liquidity risk B. Political risk C. Currency risk D. Competition risk

A: International fund involve investment at international levels.

Q: Define Foreign exchange risk.

A: The term foreign exchange risk is defined as, the risk of an ominous variation in the settlement…

Q: Basis risk refers to the risk: a. associated with unanticipated price movements on the underlying…

A: Basis risk =  spot price of underlying instrument - future price of the underlying instrument.…

Q: What are the primary risk of trading in the fed funds markets?

A: Fed funds are short-term funds that move between different financial institutions. Generally  the…

Q: Reflect  on the following areas on financial risk management: 1.Volatility of foreign exchange…

A: Risk Management - In a business environment, risk management is concerned with identifying the…

Q: In what ways do investors quantify the risk levels between domestic and foreign securities?

A: Security is an investment that gives ownership to its owner who can gain profit by investing in such…

Q: 1) The type of the risk that can be eliminated by diversification is called A) market risk. B)…

A: Risk is the possibility of happening of events that is against the estimation of investors. If the…

Q: Explain Risk Premiums, Interest Rate Risk, and Default Risk?

A: Risk premium: A risk premium is nothing but the return above the risk-free rate of return that an…

Q: What are the major drivers of portfolio-level credit risk?

A: Financial institutions are frequently mapping and controlling the risk from credit exposures at…

Q: Recommend how MR D.I.Y. Group (M) Berhad could manage the interest rate risk and foreign exchange…

A: Introduction  Derivatives are financial instrument that have values derived from other assets like…

Q: The intrisic value of a security is based on which of the following items. I- amount of risk  II-…

A: Intrinsic value of a security is the present value of expected future cash flows, discounted with an…

Q: Market risk is referred to as: systematic risk. total risk. diversifiable risk. asset specific…

A: Market risk is the type of risk that affects the whole market. Market risk is not specific to a…

Q: Explain the random walk model for exchange rate forecasting. Can it be consistent with technical…

A: The Random Walk Model suggests that the movement in the prices of the stocks is unpredictable and if…

Q: What is exchange rate risk?

A: Exchange rate risk It is a chance of occurrence of loss in the investment value because of uncertain…

Q: Market risks are: B. Interest rate risk, foreign exchange risk, portfolio concentration, commodity…

A: Market risk are associated with ups and down of market. It referes to risk of loss aries from the…

Q: The ____ theory holds that the securities markets are demarcated by maturity.   a. expectations…

A: Expectations theory attempts to predict what short-term interest rates will be in the future based…

Q: Market risk embodies the following risks except: O a. Financial. O b. Interest rate. Tax. O d.…

A: Market risk is a undiversified risk which cannot be controlled. It is a systematic risk that affects…

Q: To what types of risk are investors of foreign bonds exposed?

A: Bond is a source raising debt fund and it is affixed income security to the bondholders. The bond…

Q: What is counterparty risk?

A: Counterparty risk can exist in trading, credit, investment.

Q: What is idiosyncratic risk? How does it differ from market risk?

A: Idiosyncratic risk or unsystematic risk or specific risk is that risk which belongs to specific…

Q: b) Give a graphical example to present the positioning of. E Systematic risk E Risk free rate of…

A: Risk is the uncertainty associated with an investment. The investor receive higher return to…

Q: What is the difference (description) between Money Market, Bond Market, Equity Market, Foreign…

A: Money market, bond market, equity market, foreign exchange market and derivatives market are…

Q: Market risk arises from the level or volatility of market prices of assets. It involves the exposure…

A: Market risk is the chance of suffering losses as a result of price changes that are unfavorable for…

Q: Give each risk one situational example Basic risk Capital risk Country risk Default risk Delivery…

A: Introduction of Risk Risk can be defined as a situation where the possible consequences of the…

Q: Which is not the types of foreign risk Default risk O Price risk O Sovereign risk O transactional…

A: risk: it is probability of loss.

Q: ith practical example ?

A: Currency risk, also called foreign-exchange risk or exchange-rate risk, is the risk that changes in…

Q: Compare speculative risk and pure risk.

A: Pure Risk is the possibility where there is loss or no loss. Speculative risk  is a possibility of…

Q: Apart from default risk, what other significant risk does an investor in foreign bonds face?…

A: This question illustrates the difficulties that a foreign bond investor has.

Q: Define real risk-free interest rate

A: Real Risk Free Interest Rate is a theoretical concept which refers to the required return required…

Q: Question 7 What is the other name for fim-specific risk? O Systematic risk O Market risk O Micro-cap…

A: Risk includes the likelihood of losing some or all of the original investment. Business risks refer…

Q: Which of the following is included inthe risk-free rate? O A. the default premium O B. the expected…

A: Risk free rate is the return on the asset that has zero risk associated to it. It is a theoretical…

Q: What is the importance of market risk premium?

A: Market risk premium Variance of the market return and the risk-free rate. It depicts the equity…

Q: According to PFRS 7, it is the risk that the fair value or future cash flows of a financial…

A: Market risk comprises three types of risk: Currency risk Interest rate risk Other price risks

Q: Explain 1-2 sentences Financial Risk Interest Rates Volatility Foreign Currency Liquidity…

A: Financial risk is a type of risk that can lead to the loss of stakeholder capital. For the…

Q: How are total risk, market risk, and diversifiable risk related?

A: There are different types of risk associated with the investment. Some can be controlled and some…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.