Risk factors of investing in securities.

Perhaps the most important concepts, which means the investor at the foot on the employment of money is the return on investment and risk investment.What is the risk? The danger is if the decision where the decision to one of a number of possible results that are known to the potential of each. It is possible to define risk of investing in other ways. For example, the risk can be defined as the probability of loss. As well as the risk can be defined as the probability of getting a return on investment is less than the expected return. One of the best definitions of risk is viewed as a change in return on investment on the expected return on investment.But there are a number of factors that create the risk of investing in securities, and the factors are as follows:1 - the risk of defaults Default Risk.This risk arises from the deteriorating financial situation of the company issuers of securities and the stoppage of payment of financial obligations. May stop the company specifically for the payment of interest on the debt and repayment of debt. It can also stop payment of dividends on preferred shares, if any, and the deterioration of the financial situation of the company and the isolation of solvent down the value of securities issued by the Company. If it is not correct the financial situation of the company and the situation has been bad, this could lead the company into bankruptcy and liquidated if the value of the break is greater than its value as if it continued in operation. And distributed break-up value of the company usually according to priorities as follows: attorney fees and court costs relating to the question of bankruptcy, wages payable, taxes due, if any, creditors, attorneys general, preference shareholders, and finally the ordinary shareholders. If the value of the company remaining in operation greater than the value of the break, are the reorganization of the company to agree on a capital structure appropriate and distributed to creditors and owners. has become in such a distribution to creditors-general shareholders excellent, and the last two turns to ordinary shareholders. The ordinary shareholders may lose their ownership in the company in part or in whole. There in the sophisticated financial markets financial services institutions are constantly marking the quality of quality ratings for stocks and corporate bonds issued by companies such as Standard & Poor's standard and poors, Moody moodys.2 - the risk of change in interest rates.Affect change in interest rates on the prices of stocks and bonds in financial markets. For example, when rising interest rates in the market, bond prices fall because of the inverse relationship between the yield on the bond and the price of the bond. As well as rising interest rates to decline in stock prices. Rising interest rates also mean a rise in the rate of capitalization of property in the stock market that is discounted cash flow calculation for shares, price, and thus lower stock prices. On the other hand high interest rates makes bonds more attractive for investment due to higher revenues compared to mine-at least thus encouraging investors in the market to sell stocks and buy bonds and the result is a decline in stock prices.3 - change the status of the risk of the stock market.Changing market conditions, securities markets in general, expansionary increasing the values of securities in general and growing bull markets, to the markets of the deflationary decline in stock prices in general are going to decline and Bear markets. And track these changes in the stock market business cycles that affect the performance of companies. And carried out the performance of the overall market indicators to track stock prices.4 - the risk of merchantability.The part of the risk of investing in securities that may arise from a lack of liquidity and therefore some of the low usability on marketing. This means that you must pay brokerage commissions or high to give significant discounts to complete the sale. For example, there is no active secondary markets for some securities, which reduces liquidity (market), while there are active secondary markets in other securities make them very liquid (can be sold in the market at any time and at prices not much different from the previous sale prices).5 - risk management company.Supports the company's performance and therefore the prices of securities issued by it on the quality of decisions taken by the management company. The company, which managed to take investment decisions, operational and financing Kovh increase profits and grow as improving the value of its securities in the market. And vice versa in the case of the followers of non-Kovh policies in the management of the company.6 - risk of deterioration of the purchasing power of cash.Decline in the purchasing power of money as a result of monetary inflation. Known as inflation to rise in the price level. At any given time there are goods and services prices rise as there are other goods and services prices drop, this has nothing to do with inflation. But when there is a rise in the general price level, this is evidence of inflation, measured using the price index, retail or wholesale. And to determine the annual inflation rate calculated rate of change in the price index during the year. What matters to the investor when employment in the securities is the real return on investment and not a monetary return. Any return on investment after deducting inflation of it. The investor's goal should be to achieve rates of return higher than inflation rates in order to keep a positive real return.