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Questions and Answers
Which of the following best describes capital market risk?
Which of the following best describes capital market risk?
- The risk of losing money due to changes in foreign exchange rates
- The risk of losing money due to changes in interest rates
- The risk of losing money due to changes in inflation rates
- The risk of losing money due to changes in stock prices (correct)
What is one possible consequence of capital market risk?
What is one possible consequence of capital market risk?
- Increased borrowing costs for companies (correct)
- Decreased demand for goods and services
- Decreased consumer spending
- Increased government regulation
How can investors mitigate capital market risk?
How can investors mitigate capital market risk?
- Timing the market to buy low and sell high
- Investing only in high-risk assets
- Investing in a single stock
- Diversifying their investment portfolio (correct)
