Risk Assessment Quiz

Systematic risk influences a large number of assets and is virtually impossible to protect against. It could be caused by significant political events affecting multiple assets in a portfolio.

Unsystematic risk, also known as specific risk, affects only a small number of assets. An example is news that impacts a specific stock, such as a sudden employee strike.

Credit risk is the risk that a company or individual may be unable to meet its debt obligations, including interest or principal payments.

Country risk pertains to the risk that a country may fail to fulfill its financial commitments.

Foreign-exchange risk is the risk associated with investing in assets denominated in a different currency, subject to potential fluctuations in exchange rates.

Systematic risk influences a large number of assets and is caused by external factors like significant political events, while unsystematic risk affects a very small number of assets and is specific to individual companies or industries.

Credit risk is the risk that a company or individual will be unable to pay the contractual interest or principal on its debt obligations. An example is a company defaulting on its loan payments.

Country risk refers to the risk that a country won't be able to honor its financial commitments, which can affect investments in that country due to economic instability or political turmoil.

Foreign-exchange risk is the risk of loss due to adverse movements in exchange rates. It affects investments in international markets and can lead to losses when converting profits back to the investor's home currency.

Preventative action can help avoid or minimize the negative occurrence by implementing strategies to reduce exposure to risk, such as diversification, hedging, or risk management techniques.