Write any three risks which mutual funds are exposed?

1.	Write any three risks which mutual funds are exposed?
Answer» Some of the Risk to which Mutual Funds are exposed to is given below: 1. Market risk If the overall stock or bond markets fall on account of overall economic factors, the value of stock or bond holdings in the fund‟s portfolio can drop, thereby impacting the fund performance. 2. Non-market risk Bad news about an individual company can pull down its stock price, which can negatively affect fund holdings. This risk can be reduced by having a diversified portfolio that consists of a wide variety of stocks drawn from different industries. 3. Interest rate risk Bond prices and interest rates move in opposite directions. When interest rates rise, bond prices fall and this decline in underlying securities affects the fund negatively.

Answer»

Some of the Risk to which Mutual Funds are exposed to is given below:

1. Market risk

If the overall stock or bond markets fall on account of overall economic factors, the value of stock or bond holdings in the fund‟s portfolio can drop, thereby impacting the fund performance.

2. Non-market risk

Bad news about an individual company can pull down its stock price, which can negatively affect fund holdings. This risk can be reduced by having a diversified portfolio that consists of a wide variety of stocks drawn from different industries.

3. Interest rate risk

Bond prices and interest rates move in opposite directions. When interest rates rise, bond prices fall and this decline in underlying securities affects the fund negatively.

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