Common use of Market Risk Clause in Contracts

Market Risk. The risk of investments declining in value because of economic developments or other events that affect the entire market. The main types of market risk are equity risk, interest rate risk and currency risk. • Equity risk - applies to an investment in shares. The market price of shares varies all the time depending on demand and supply. Equity risk is the risk of loss because of a drop in the market price of shares. • Interest rate risk - applies to debt investments such as bonds. It is the risk of losing money because of a change in the interest rate. For example, if the interest rate goes up, the market value of bonds will drop. • Currency risk - applies when you own foreign investments. It is the risk of losing money because of a movement in the exchange rate. For example, if the EURO becomes less valuable relative to the GBP Pound, your EURO denominated investment will be worth less in GBP Pounds.

Market Risk. The risk of investments declining in value because of economic developments or other events that affect the entire market. The main types of market risk are equity risk, interest rate risk and currency risk. •  Equity risk - applies to an investment in shares. The market price of shares varies all the time depending on demand and supply. Equity risk is the risk of loss because of a drop in the market price of shares. •  Interest rate risk - applies to debt investments such as bonds. It is the risk of losing money because of a change in the interest rate. For example, if the interest rate goes up, the market value of bonds will drop. •  Currency risk - applies when you own foreign investments. It is the risk of losing money because of a movement in the exchange rate. For example, if the EURO becomes less valuable relative to the GBP Pound, your EURO denominated investment will be worth less in GBP Pounds.

Market Risk. The risk of investments declining in value because of economic developments or other events that affect the entire market. The main types of market risk are equity risk, interest rate risk and currency risk. •  Equity risk - applies to an investment in sharess hares. The market price of shares varies all the time depending on demand and supply. Equity risk is the risk of loss because of a drop in the market price of shares. •  Interest rate risk - applies to debt investments such as bonds. It is the risk of losing money because of a change in the interest rate. For example, if the interest rate goes up, the market value of bonds will drop. •  Currency risk - applies when you own foreign investments. It is the risk of losing money because of a movement in the exchange rate. For example, if the EURO becomes less valuable relative to the GBP Pound, your EURO denominated investment will be worth less in GBP Pounds.