Investment Risks Word Search
MediumFind each term hidden in the grid. Selecting a word reveals its definition and a link to study it in depth.
P
V
X
I
N
F
L
A
T
I
O
N
Z
J
Q
F
G
T
M
E
X
P
U
S
U
N
D
N
A
L
M
W
T
P
B
Y
V
B
I
N
K
E
W
I
E
A
X
H
J
O
Q
U
S
Q
U
F
C
Y
P
U
R
Q
H
R
A
T
E
R
I
S
K
A
J
Q
S
K
B
Q
M
N
F
J
T
J
N
L
I
R
S
R
E
T
E
P
A
B
L
C
W
E
Q
B
G
O
J
T
T
K
O
B
T
S
U
T
Q
Q
A
S
L
W
R
T
L
U
A
F
E
D
N
S
O
O
W
U
D
I
R
N
L
D
Q
L
T
C
M
R
R
A
M
C
S
B
S
C
E
T
I
Z
X
H
L
R
S
V
O
K
O
Y
W
E
G
L
M
P
N
B
R
N
X
Y
B
T
M
Y
C
N
E
R
R
U
C
F
G
A
N
R
C
I
T
A
M
E
T
S
Y
S
L
O
B
A
Q
A
X
Y
T
I
D
I
U
Q
I
L
Q
E
F
Drag across letters, or tap the first and last letter. On a keyboard, use arrows + Enter.
Terms in this set
- Systematic vs. Nonsystematic Risk Systematic risks (market, interest-rate, inflation) affect the whole market and CANNOT be diversified away; nonsystematic risks (business, credit, regulatory) are issuer- or industry-specific and CAN be reduced through diversification.
- Market Risk The risk that a security's price falls because the overall market declines, regardless of the issuer's own performance — the classic systematic risk.
- Interest-Rate & Reinvestment Risk Interest-rate risk is the chance that rising rates push existing bond prices down — worst for long maturities and low coupons; reinvestment risk is its mirror: falling rates force coupons and called principal to be reinvested at lower yields.
- Credit & Default Risk The risk that an issuer fails to pay interest or principal on time; measured by the rating agencies and priced as extra yield (the credit spread) over Treasuries.
- Inflation (Purchasing-Power) Risk The risk that rising prices erode the real value of an investment's future payments — hardest on long-term fixed payments like bond coupons and fixed annuities.
- Liquidity & Marketability Risk The risk of being unable to sell an investment quickly at a fair price; thinly traded stocks, municipal bonds, non-traded REITs, hedge funds, and DPPs carry the most.
- Currency & Political Risk Risks of investing across borders: exchange-rate moves can erase local-currency gains (currency risk), and unstable governments, expropriation, or capital controls threaten the investment itself (political/country risk).