Risk

RECENT NEWS
SeekingAlpha  5 hrs ago  Comment 
SeekingAlpha  6 hrs ago  Comment 
Insurance Journal  9 hrs ago  Comment 
California is not just fighting nature as it attempts to repair the nation’s tallest dam, badly damaged last month by surging storm waters. It’s also racing the clock. Safety experts say there is no time for delay in a state …
newratings.com  12 hrs ago  Comment 
BRUSSELS (dpa-AFX) - The Swiss franc climbed against most major opponents in the European session on Friday amid risk aversion, as investors awaited a key U.S. vote on healthcare plan intended to repeal and replace the Affordable Care Act. The...
guardian.co.uk  Mar 24  Comment 
Workers in wholesale and retail sectors at highest risk from breakthroughs in robotics and artificial intelligence, PwC report finds More than 10 million UK workers are at high risk of being replaced by robots within 15 years as the automation of...
The Times of India  Mar 23  Comment 
SOUTHKOREA-ECONOMY/CENBANK:Bank of Korea sees financial risk rising but manageable after Fed rate hikes
Wall Street Journal  Mar 23  Comment 
White House trade moderates are watering down President Trump’s tough trade plans, AFL-CIO President Richard Trumka says in a Wall Street Journal interview.




 

Risk in economic terms indicates the probability of the occurance of a specific event, which would lead to damage or loss (p.e. the likelihood of losing ship and freight to a hurricane). In distinction to risk, chance indicates the possibility of a positive outcome.

Investments include both risk and chance. This is the so called Risk-Return Tradeoff: low levels of uncertainty offer low potential returns but also low potential losses, whereas high levels of uncertainty offer high potential returns but also high potential losses. Another way many investors quantify and calculate risk is in terms of the standard deviation of returns. This is because all else being equal, risk averse investors prefer returns that are less volatile and more predictable.

Companies try to identify, analyse and control risk through concepts of risk management.

Risks of Bond Investing

Bonds carry credit risk ("will I get my money back?"), prepayment risk, liquidity risk and interest-rate risk.

  • Many bonds give the bond issuer the right to repay the bond early -- which happens more often when rates are low, in other words, just when you don't want your money back. This is prepayment risk.
  • Liquidity risk is the risk that you won't find a good price for your bond when you want to sell it -- because there are so many more bond issuers than stock issuers, and because bonds are not exchange-traded, there may not be a willing buyer.
  • Interest-rate risk is the opposite of prepayment risk: when rates go up, the value of your bond will drop (it drops more, the further away it is from maturity). If your circumstances change and you need to sell the bond before maturity, you can lose capital that you would otherwise receive, if you held the bond to maturity.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki