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AGRIB-129: Investment Management Quiz

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Questions and Answers

What is the risk associated with the possibility of having to sell investments due to an unforeseen event?

Horizon risk

Which risk is relevant for individuals who are retired or nearing retirement and refers to the risk of outliving savings?

Longevity risk

What type of risk involves the potential loss when investing in foreign countries, such as the risk of nationalization?

Foreign investment risk

What is concentration risk?

Concentration risk is the risk of loss due to having a large portion of your investments in one asset class, such as stocks. Signup and view all the answers

What is reinvestment risk?

Reinvestment risk is the risk that an investor will not be able to reinvest cash flows from an investment at the same rate of return. Signup and view all the answers

What is credit risk?

Credit risk is the risk of loss due to the borrower not being able to repay a loan or meet its debt obligations. Signup and view all the answers

What is concentration risk?

The risk of loss because your money is concentrated in one investment or type of investment. Signup and view all the answers

How can you mitigate concentration risk?

By diversifying your investments over different types of investments, industries, and geographic locations. Signup and view all the answers

What is credit risk?

The risk that the government entity or company that issued the bond will run into financial difficulties and will not be able to pay the interest or repay the principal at maturity. Signup and view all the answers

How can you assess credit risk in bond investments?

By looking at the credit rating of the bond. Signup and view all the answers

What is reinvestment risk?

The risk of loss from reinvesting principal or income at a lower interest rate. Signup and view all the answers

How can you minimize reinvestment risk?

By considering the potential impact of changing interest rates on your investment returns. Signup and view all the answers

What is concentration risk?

Concentration risk refers to the risk of having a large portion of investments in a single asset or asset class. Signup and view all the answers

Define reinvestment risk.

Reinvestment risk is the risk that an investor will have to reinvest principal or interest at a lower rate in the future. Signup and view all the answers

What is credit risk in investment?

Credit risk refers to the risk of loss arising from the failure of a borrower to repay a loan or meet debt obligations. Signup and view all the answers