Asset risks
Arbitrage transactions in modern securities markets involve fairly low day-to-day risks, but can face extremely high risk in rare situations, particularly in .... and can lead to .... .
financial crises, bankruptcy
The risk of direct financial losses includes:
Selective risk
Operational risk
Bankruptcy risk
is lesser-known than the previous two but is a significant risk nevertheless. It is caused by the effect of unexpected currency fluctuations on a company’s future cash flows and market value and is long-term in nature.
Economic (or operating) exposure
The risk of direct financial losses includes:
Selective risk
Operational risk
Bankruptcy risk
measures the average change in selling prices received by domestic producers for their goods and services over time.
Producer Price Index (PPI)
Companies are exposed to which types of risk caused by currency volatility.
Transaction exposure
Translation exposure
Economic (or operating) exposure
The risk of losses from stock exchange transactions.
Stock exchange risks
The giraffe is taller than the kangaroo but shorter than the palm.
Which animal is the tallest?
The giraffe.
what kind of risk is defined as non-fulfillment by the borrower of the terms of the loan agreement, that is, non-payment of the loan amount (in part or in full) and interest on it within the terms specified in the agreement.
Credit risk
I make two people out of one.
What am I?
A mirror.
the options that affect the value and profitability of bonds
The possibility of early repurchase.
Convertibility.
There are two ducks in front of a duck, two ducks behind a duck and a duck in the middle. How many ducks are there?
Three ducks. This is a classic example of a question that seems to present a complex scenario but, in reality, is quite simple. It requires visualising the situation to understand the actual arrangement of the ducks.
are the risk of losses from stock exchange and the risk that a company’s operations and profitability may be affected by changes in the exchange rates between currencies.
Exchange risks
What loses its head in the morning and gets it back at night?
A pillow.
what is the difference between Disinflation and deflation
A decline in the general price level in an economy, signified by an annual inflation rate below 0% (negative).
Disinflation is a fall in the rate of inflation e.g. from 5% to 2%. Prices are still rising but at a slower rate.
What is full of holes but still holds water?
A sponge (gupka)
The group of measures to minimize stock exchange risks includes...
Hedging,
Creation of financial reserves,
Diversification,
The introduction of a variant system of stock exchange exposure to controllable risk factors.
If an investment has a 50% chance of gaining 48% and a 50% chance of losing 30%. What would be the expected return.
50% x 48% + 50% x -30% = 9%
... measures the average change in prices paid by consumers for a fixed basket of goods and services over time.
Consumer Price Index (CPI)
How can we calculate ROI (Return on investment). Formula
RIO=Net profit/Cost of investment*100
RIO=(Net profit-Cost of investment)/Cost of investment*100
.... arises from the effect that exchange rate fluctuations have on a company’s obligations to make or receive payments denominated in foreign currency. This type of exposure is short-term to medium-term in nature.
Transaction exposure
... arises from the effect of currency fluctuations on a company’s consolidated financial statements, particularly when it has foreign subsidiaries. This type of exposure is medium-term to long-term
Translation exposure
This feature gives the bond holder the right to exchange it for a predetermined amount of shares of the company that issued these bonds. A bond with this characteristic is called a convertible bond.
Convertibility
Types of investment risks
Purchasing Power Risks, Re-investment Risks, Interest Rate Risks, Political Risks, Exchange Rate Risks
There are two ducks in front of a duck, two ducks behind a duck and a duck in the middle. How many ducks are there?
Three ducks. This is a classic example of a question that seems to present a complex scenario but, in reality, is quite simple. It requires visualising the situation to understand the actual arrangement of the ducks.