List three risk associated with the management of stock
1. Market risk: This refers to the risk associated with fluctuations in the stock market. Stock prices are influenced by various factors such as economic conditions, industry trends, political events, and investor sentiment. If the overall market or specific sectors experience a downturn, it can negatively impact the value of a stock portfolio.
2. Business risk: This pertains to risks specific to the company in which one is investing. These risks can include factors such as poor financial performance, competitive threats, changes in management, legal or regulatory issues, and product or service quality problems. If a company encounters any of these risks, it can lead to a decline in the stock price and potential financial loss for investors.
3. Liquidity risk: This refers to the risk of not being able to easily buy or sell stocks at a desired price. In an illiquid market, where there is low trading volume or limited number of buyers/sellers, it can be difficult to execute trades quickly and efficiently. This can result in the inability to exit a position or face significant price fluctuations when attempting to buy or sell stocks.