Unlimited Risk

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DEFINITION of 'Unlimited Risk'

The risk of an investment that has unlimited downside potential.

INVESTOPEDIA EXPLAINS 'Unlimited Risk'

Examples of investments with inherent unlimited risk include short positions and futures contract trading. In short selling or trading futures contracts, the potential to lose more than your initial investment is theoretically infinite.

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    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
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    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
  3. How can an investor profit from a fall in the utilities sector?

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  4. How are commodity spot prices different than futures prices?

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  5. How do commodity spot prices indicate future price movements?

    Commodity spot prices indicate future price movements because commodity futures prices are calculated using spot prices. ... Read Full Answer >>
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    Mark to market accounting has been around in concept since the stock market began; however, it was not officially part of ... Read Full Answer >>
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