Forms of Risk in CTFA Exam

C

The correct answer is C. Presented risks.

Risk refers to the possibility of loss or harm occurring, and there are various types of risks that financial professionals must consider. The four most common forms of risk are credit risk, market risk, operational risk, and liquidity risk.

A. Political risks refer to the potential for financial loss due to political instability or changes in government policy. This type of risk is commonly associated with international investing, where changes in government or economic policies can have a significant impact on financial markets.

B. Interest rate risks refer to the potential for financial loss due to changes in interest rates. This type of risk is particularly relevant to fixed income investments, such as bonds, where changes in interest rates can impact the value of the investment.

C. Presented risks is not a recognized form of risk. It is likely a typo or an incorrect term.

D. Economic risks refer to the potential for financial loss due to macroeconomic factors such as inflation, recession, or changes in consumer behavior. This type of risk is relevant to all types of investments and can have a significant impact on financial markets.

In summary, while political risks, interest rate risks, and economic risks are recognized forms of risk, presented risks is not a recognized form of risk.