What are the main market risks that affect investments?
The main market risks include interest rate risk, currency risk, equity risk, and commodity risk. Each can impact returns.
Can you explain how interest rate risk specifically affects investments?
Interest rate risk affects the value of fixed-income investments. When rates rise, bond prices typically fall, leading to potential losses.
What strategies can investors use to mitigate these risks?
Investors can diversify their portfolios, use hedging strategies, and invest in assets that typically perform well during market volatility.
Are there any specific sectors that are more vulnerable to market risks?
Yes, sectors like utilities and real estate can be more sensitive to interest rate changes, while technology may be more affected by economic cycles.
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