Wednesday, September 22, 2010

TYPES OF RISK IN INTERNATIONAL INVESTMENTS

1} FOREX RISK- The change in fluctuations of exchange rate have a risk that your investments can suffer. So forex risk is a big risk in international investments as change in exchange rates would hamper your investments.
2}POLITICAL RISK- Change in political scenario would also be a big problem to our investments in international market. It may be due to change in political ruling party abroad or political breakdown.
3}TAXATION RISK- The taxation scenario in different countries is different. So, If you invest abroad, if there are any changes in taxation rules and regulations, it would prove detrimental to your investments.
4}MARKET RISK- These includes risk of international markets i.e with respect to demand and supply scenario in the international markets.
5}INFORMATION BARRIERS -There are several information barriers or information gaps in international investments as you are not aware of international scenario.
6}INTEREST RATE RISK- Various fluctuations in interest rate may hamper your investments as the interest rate in an economy may change from time to time according to the changing scenario.
7}GLOBAL CAPITAL MARKETS- There is a risk of your investments in international capital markets as the capital markets can breakdown because of recession.The recent example of world capital markets breaking down in 2008.
8}REGULATORY BARRIERS- Different countries have different regulatory requirements and laws, hence there is a risk of regulatory barriers in international investment
9}LIQUIDITY RISK- Risk to Liquidate or cash your investments as and when required..

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