Question

sources of investment uncertainity

Answer 1

Sources of investment uncertainty:

• Risk of loss: when an investment is made, there is no guarantee that the investor will get all his money back at the time of sale.
• Credit risk of the investing company. This can arise in situations when the company is unable to pay its debts.
• The value of the money today will not be the same in the future. Inflation can be reason for this. This is considered to be a risk for the investors as it may affect the returns earned by them.
• Another source of uncertainty is when our savings get locked in banks or other financial institutions through fixed deposit options, the investor can have the chance of earning better than these deposits. As fixed time period investments will not let the investors to take the money in between the term.
• Marketability risk is one other source where at times there may not buyers available to acquire when the investors want to sell their investments.
• The next source of risk seems to be focused one. This can happen when the investments are made in any particular industry or sector or product. So if it declines, the returns of the investor will also decline.