Risk Review

Which of the following is NOT a way to analyze an asset’s risk?

• Stand-alone risk

• Portfolio risk

• Market risk

• Credit risk

Which type of risk is associated with a single investment?

• Portfolio risk

• Stand-alone risk

• Market risk

• Credit risk

Which type of risk is associated with a group of investments?

• Stand-alone risk

• Portfolio risk

• Market risk

• Credit risk

What is a risk premium?

• The guaranteed return on an investment

• The extra return for choosing a riskier investment

• The standard deviation of returns

• The average return of a safe investment

What is the main risk for bonds?

• Price volatility

• Issuer's inability to repay debt

• High inflation

• Currency fluctuation

How are bonds generally described in terms of risk?

• Higher risk

• Lower risk

• Unpredictable risk

• No risk

What should investors understand to manage risk effectively?

• General market trends

• Specific risks of each asset

• Popular investment strategies

• Historical data

What is a potential downside of stocks?

• They are too stable

• They offer low returns

• They can bring big losses

• They grow too slowly

What is one benefit of investing in mutual funds or ETFs?

• Exposure to a single market

• Increased risk

• Exposure to many markets at once

• Guaranteed high returns

Which risk involves changes in the value of the dollar?

• Industry risk

• Currency risk

• Concentration risk

• Stagnation risk