Chapter 3: Yeh Risk Khatam KYU NAHI HOTA?!

Yesterday we discussed types of risk. today, we’ll explore a few more risks!

Political and Regulatory Risk: It involves the potential impact of government actions or changes in regulations on investments or businesses.

For instance, if the government introduces new regulations that increase costs or disrupt operations for a transportation company, it illustrates political and regulatory risk.

Interest Rate Risk: It is the possibility of changes in interest rates affecting the value of fixed-income investments like bonds or loans.

For instance, if you have a fixed-rate mortgage but interest rates rise, you miss out on the opportunity to benefit from lower rates, demonstrating interest rate risk.

Currency Risk: It refers to the potential impact of exchange rate fluctuations on investments denominated in different currencies.

For example, if you invest in a foreign stock, changes in exchange rates can affect the value of your investment when you convert it back to your local currency, leading to currency risk.

Today is the end of our course, let’s check in tomorrow to test your understanding on “Risk” with a #FinQwithYES