Question 2 (20 Marks)

Risk is the potential for uncontrolled loss of something of value. Values can be gained or lost when

taking risk resulting from a given action or inaction, foreseen or unforeseen. Risk can also be defined

as the intentional interaction with uncertainty. You are required to explain each of the following risks in

detail:

2.1)Foreign Exchange Risk (4 marks)

2.2)Credit Risk (4 marks)

2.3)Interest Rate Risk (4 marks)

2.4)Commodity Price Risk (4 marks)

2.5)Equity Price Risk (4 marks)