Explain risks in Portfolio?
Introduction:
Risk is nothing but a potential for emergence of unexpected occurrences. There is uncertainty about the cash flows that will be provided in the future while making investments.
Types of portfolio risks:
Market risk: Market risk is the probability that the aggregate market environment as a whole could influence a portfolio.
Business risk: It is also another threat to ownership of an investor. Business risk is when the management of a commercial company may be inept, or when the product or service is obsolete. They walk out of business as a result.
Liquidity risk: It is an investor’s willingness to turn his or her investments into cash if necessary. In short, it is the chance that nobody wants to but while an investor is able to sell.
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