The following points highlight the seven main types of risk on investment. The types are: 1. Interest Rate Risk / Market Risk 2. Credit Risk / Counter-Party Risk 3. Call Risk / Prepayment Risk 4. Put Risk 5. Yield Curve Risk 6. Inflation Risk 7. Sovereign Risk. 1. Interest Rate Risk / Market Risk: If we talk of fixed income [...]
In this article we will discuss about the benefits of having a diversified investment portfolio. Yearly Returns from Each Investment Avenue: Let us first consider the returns that you would have earned each year during the period from 2000 to 2010 from four main investment avenues- Equity, Fixed Income, Commodities and Gold. For the purpose of measuring returns from each [...]
The following article will guide you about how to mitigate interest rate risk. Introduction: Of the two components of interest rate risk, price risk can have a sudden and dramatic impact on your fixed income portfolio. The reinvestment risk is slow and long drawn in its effects. In the long run, interest rate scenarios change and you will most certainly [...]