What Are Risk Assets? Definition, Examples, And Types
Assets are the economic resources that give value and high returns to a business but it is also associated with risk. In this blog post, we will discuss the risk assets and their examples.
What Are Risk Assets
Risk assets refer to those financial investments or assets that are linked with high risk and high return as well. Risky assets such as stocks, currencies, high-yield bonds, real estate assets, commodities, and equities are examples of risky assets that associate with high risk and high reward as well.
These assets are risky because they change their value frequently, especially during the period of market instability and volatility.
Examples Of Risk Assets
The following are the most common examples of risky assets.
Real Estate: real estate properties change their value as per the economic or people’s income conditions.
Equities: these assets are one of the riskiest assets and change their value according to the market states, performance of a company, or economic condition.
Commodities: commodities are tangible goods that change their price according to the demand and supply of the customers and market. Seasons and events also impact their values and turnover.
High-Yield Bonds: these assets are compensated with high risk because they enjoy high returns and interest rates as well.
Types Of Risks Associated With Risk Assets
Risk nature can be different as per the conditions. The following are the most common risks that are associated with the risk assets.
- Market Risk: it refers to the overall risk in the financial market that is influenced by economic conditions, domestic political events, monetary policies, etc.
- Inflation Risk: This risk affects the purchasing power and returns
- Credit & Liquidity Risks: getting financing can be difficult and purchasing new assets can be impacted
- Business Specific Risk: these risks are unsystematic and are specific to a company or an industry. Labor inefficiency or strikes, bad management or strategic planning, and a decline in the supply chain are the most common factors of business-specific risk.
Risk Assets FAQs
Are stocks risky assets?
Stocks are risky assets because profit is not guaranteed when you buy stocks.
Is gold a risk asset?
Gold is considered one of the safest investments as it affects less or is less risky than other investments.
What is an example of a risk asset?
Currency is one of the most common risky assets as it changes frequently with time.
What are the most risky assets?
Real estate, currencies, and equities are the most risky assets.