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... investing, one must consider the investment options and the inflation risk involved. This is because, some investment options such as the stock incur a lesser risk of inflation compared to bonds. Over the years, bonds have kept pace with the inflation rate but stocks have been outpacing the inflation. In India for example, stocks have outpaced the inflation rate at an average of 10% annually. Despite this, stocks face a higher liquidity risk than money market investments and short-term bonds.
INVESTMENTS RISKS
The paper has discussed on different types of risk and investment decisions that are considered when entering into investing market.
Details
| language |  | english |
| wordcount |  | 1312 (cca 3.5 pages) |
| contextual quality |  | N/A |
| language level |  | N/A |
| price |  | free |
| sources |  | 4 |
Table of contents
Introduction 1
Industry and Business Risk 1
Inflation Risk 1
Market Risk 2
Liquidity Risk 2
Principles of Investment 2
References 5
Preview of the essay: INVESTMENTS RISKS
The return in an investment is the growth of an invested amount of money over a period of time. The investors make educated guesses prior to investing. The investment decisions are made by use of reasonable expectation that go in line with the reality. However, the actual return may not be similar to the expectation. The future returns can be determined by analyzing data that has been collected over a period of time. If the return results turn out to be different, the investor may lose a lot of money. The lesser the uncertainty, the lesser the risk involved. To invest, one must consider the sources of uncertainty. These include; inflation risk, industry and business risk, market risk, liquidity risk, risk return ...... investing, one must consider the investment options and the inflation risk involved. This is because, some investment options such as the stock incur a lesser risk of inflation compared to bonds. Over the years, bonds have kept pace with the inflation rate but stocks have been outpacing the inflation. In India for example, stocks have outpaced the inflation rate at an average of 10% annually. Despite this, stocks face a higher liquidity risk than money market investments and short-term bonds.
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Economics
/Management
/Risk Management
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