risk involved in financial markets?

Question

financial markets include:
1.Capital markets
2.Commodity markets,
3.Money markets,
4.Derivatives markets,
5.Foreign Exchange Markets.

Answer 1

What I know are there are 2 kinds of risks: market risk and diversification risk. Diversification risk is the risk you bear as a result of holding only 1 security. You are at the mercy of the firm's internal environment. To minimise this, you should diversify your portfolio by adding different kinds of securities which do not move together (i.e. when one of them goes up, the other goes down and vice versa). However, you can only diversify so much that your portfolio represents the entire market/economy. That is market risk where you are exposed to the risks associated with the economy and external factors such as political shocks.

Answer 2

There are so many risks involved.
Any way let me just list down some of the typical risks in financial markets.

Capital market

1. Market risk
2. Price risk
3. Counterparty risk
4. Settlement risk
5. Portfolio risk
6. Concentration risk
7. Interest risk
8. Liquidity risk
9. Redemption risk
10. Company risk
11. Sector risk

1. Price risk
2. Counterparty risk
3. Settlement risk
4. Embedded option risk
5. Market risk
6.



.

Answer 3

shares have been created initially to make it much less complicated to pool fairly a lot of capital to finance costly ventures. previously the discovery of inventory, such ventures have been achieveable in basic terms for extremely prosperous persons, households or governments. inspite of the undeniable fact that, the character of extensive, costly ventures is they are risky and can bring about economic loss. Society reward from the inventory markets nevertheless, because of the fact devoid of them, the variety of achieveable endeavors that a society can handle is lots greater constrained. it particularly is argued that lots of the advances humanity has made by using advertisement pastime does not have been achieveable devoid of the dangers taken as area of inventory investment.

Answer 4

Higher the risk higher the returns, lower the risk lower the returns.

Answer 5

all r linked with each other in diff ways
thus a risk affects all in diff proportion

Answer 6

all of them if not carefully managed.