1. Jeremy Smith, a Certified Financial Planner™, has scheduled a meeting with his client Claire Byrum, a sixty five year old widow. In it, he fields questions from her concerning Tallinvest, a market neutral hedge fund specializing in fundamental research of companies in the Baltic states of Lithuania, Latvia and Estonia. In framing his discussion, he advises her of several risks with which she, a dollar based investor, needs to be concerned. They are:
    1. Political Risk
    2. Inflation Risk
    3. Currency Risk
    4. Business Risk
    1. i & ii
    2. i,iii & iv
    3. iii only
    4. i, ii, iii & iv
  2. A high net worth investor is considering the purchase of a municipal bond portfolio. The risk he would be most concerned about is:
    1. Reinvestment Risk
    2. Default Risk
    3. Business Risk
    4. Tax Risk
  3. Fixed income investments are subject to all of the following risks, except:
    1. Purchasing Power Risk
    2. Interest Rate Risk
    3. Liquidity Risk
    4. Sovereign Risk
    5. None of the above
  4. Compunet, a Silicon Valley start up company, went public several years ago. After experiencing a brief run-up in price in its first couple of years, its share price was flat and then dropped precipitously pursuant to an announcement by the vice-chairman that a widely anticipated product launch was scuppered due to production problems at its plant in St. Helens. This would be an example of what sort of risk?
    1. Marketability Risk
    2. Inflation Risk
    3. Business Risk
    4. Systematic Risk


Practice Questions 5 - 9

Related Articles
  1. Personal Finance

    Risk Management Framework (RMF): An Overview

    A company must identify the type of risks it is taking, as well as measure, report on, and set systems in place to manage and limit, those risks.
  2. Investing

    Systematic Risk

    Systematic risk, also known as volatility, non-diversifiable risk or market risk, is the risk everyone assumes when investing in a market. Think of it as the overall, aggregate risk that comes ...
  3. Insights

    How to Invest In Developing Markets

    Developing markets can be attractive additions to many investor's portfolios, but carry additional risks that must be considered.
  4. Managing Wealth

    Why Companies Need Risk Management

    Implementing risk management strategies can save an entire organization from failure. Is yours up to snuff?
  5. Financial Advisor

    Impact Investing Funds: What are the Risks?

    Impact investing funds can carry risks unique to this asset class, including political risk, currency risk and exit risk.
  6. Investing

    Using Logic To Examine Risk

    Know your odds before you put your money on the table.
  7. Financial Advisor

    Pro Tips on Evaluating Clients' Risk Tolerance

    Want to keep clients longer? Bolster your risk assessment capabilities.
  8. Tech

    The Importance of Healthcare Risk Management

    Risk management is especially important in healthcare because human lives might be on the line. Here are some strategies to map out a plan.
  9. Investing

    Explaining Operational Risk

    Operational risk is the risk that a firm will fail or lose money due to failed internal processes.
  10. Trading

    What Is Your Risk Tolerance?

    Forget the cliches and uncover how much volatility you can really stand.
Frequently Asked Questions
  1. What are Common Examples of Monopolistic Markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ...
  2. What is the gold standard?

    The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold, but ...
  3. What's the most expensive stock of all time?

    The most expensive publicly traded stock of all time is Warren Buffett’s Berkshire Hathaway.
  4. What is a "socially responsible" mutual fund?

    As the name suggests, socially responsible mutual funds invest exclusively in socially responsible investments.
Trading Center