Capital Risk

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DEFINITION

1. The risk an investor faces that he or she may lose all or part of the principal amount invested.

2. The risk a company faces that it may lose value on its capital. The capital of a company can include equipment, factories and liquid securities.

INVESTOPEDIA EXPLAINS

1. For example, when someone invests $10,000 into the stock market, he or she faces a capital risk on the $10,000 invested.

2. If a company does not insure the value of some of its assets, it will face capital risk from such things as fire, flood and theft.



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