61.   Interest rate risk is the main form of market risk for bonds paying fixed coupons.

62.   Political risk is the risk that an investment abroad may be expropriated by the overseas government.

63.   So the two investments generate the same return if both PPP and the international Fisher effect hold, in which case exchange rate risk is unimportant.

64.   The only credit risk is therefore with the clearing house.

65.   The non-market risk is the portion of total variance left unexplained by the model and is the variance of the error term.

66.   Therefore, total and systematic risk should not be too different in a well-diversified portfolio.

67.   If the investor is a purchaser, the risk to capital is therefore limited and known.

68.   The degree of risk will vary between proposals, but some risk will always be present and the information will seldom be complete.

69.   A risk is an uncertainty to which a probability can be assigned.

70.   RISK is the chance of an adverse event.