User talk:Brandon Harold/sandbox

Market risk Main article: Market risk The four standard market risk factors are equity risk, interest rate risk, currency risk, and commodity risk:

Equity risk is the risk that stock prices in general (not related to a particular company or industry) or the implied volatility will change. When it comes to long-term investing, equities provide a return that will hopefully exceed the risk free rate of return.Brandon Harold (talk) 18:51, 6 December 2018 (UTC) Salomons, Roelof, and Henk Grootveld. “The Equity Risk Premium: Emerging vs. Developed Markets.” Emerging Markets Review, vol. 4, no. 2, 2003, pp. 121–144., doi:10.1016/s1566-0141(03)00024-4. Brandon Harold (talk) 18:50, 6 December 2018 (UTC) The difference between return and the risk free rate is known as the equity risk premium. When investing in equity, it is said that higher risk provides higher returns. Hypothetically, an investor will be compensated for bearing more risk and thus will have more incentive to invest in riskier stock. A significant portion of high risk/ high return investments come from emerging markets that are perceived as volatile.Brandon Harold (talk) 18:46, 6 December 2018 (UTC) Interest rate risk is the risk that interest rates or the implied volatility will change. Currency risk is the risk that foreign exchange rates or the implied volatility will change, which affects, for example, the value of an asset held in that currency. Commodity risk is the risk that commodity prices (e.g. corn, copper, crude oil) or implied volatility will change. Brandon Harold (talk) 19:39, 29 November 2018 (UTC)