Market risk is the possibility that an individual or other entity will suffer losses due to factors affecting the overall performance of investments in financial markets. It also refers to the risk of losses in positions as a result of changes in market variables.
Interest rate risk, equities risk, commodity risk, and currency risk are examples of market risk. Interest rate risk is the volatility that might accompany changes in interest rates. Equity risk is the risk associated with changing stock prices. A change in the price of currencies causes currency or exchange-rate risk.
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