Question

Identify any additional risks a global investor could face while investing in BHP Billiton and Rio Tinto shares and bonds over the next six to twelve months.

Answer 1

Additional risk that a global investors would be facing when investing into BHP billiton and Rio tinto shares and bonds over next 6 to 12 months are as follows-

A. these companies are primarily exposed to metal and mining and if the prices of their metals is going to fall then the overall revenues are going to fall and these Global investors will be exposed to those pricing risk.

B. Exchange rate fluctuation in respect to Australian markets are another risk when an investor who is other country investors investing into the shares.

C. Another risk which a global investor is exposed to when investing into this company shares will be related to the monetary policy of Australian government which is continuously changing the interest in respect to the Australian Markets, and if they are going to increase the interest rates than the inflation will be going higher and the Australian currency will be going strong so investor will be finding the rate of return shrinking

D. Risk related to global recession can also impact the overall rate of return because when there will be a global recession the Australian companies are not hedged from it.

E. Risk related to political instability in Australian markets which can expose these companies to higher rate of fluctuations and that could eventually affect the rate of return of the Global investor