Question

QUESTION 2

As you make financial decision, elaborate any FIVE (5) types of risk that you encounter that affect your investment strategy during Movement Control Order 2020.

Answer 1

1. Risk of Diversification : There is greater risk in appropriate diversification during movement control order. FMCG would be a safe bet.

2. Identifying risk reward pattern of different types of assets like shares and bonds etc . Assets are always chosen as per the personal interests and preferences of the investor. If he is against taking too much of risk, would go with bonds otherwise would prefer shares.

3.Identification of cost averages : During the times of movement control order , buy more when prices are lower and buy less when its higher. This will take care of average cost. In the long run lower average cost will fetch high returns.

4. Business risk : High cost risks in marketing strategy to get high returns . In anticipation of high returns , entities may go for aggressive cost high marketing strategies, which can be a potential risk , unless it is carefully assessed.

5. Financial risk: Losing invested money because of Low stock prices is another potential threat. If some one can afford to hold it, it’s always better not to sell of at lower price with a fear of further decline. Keep your cool.