1. Interest rate risk is the main form of market risk for bonds paying fixed coupons. 2. Rather, it is market risk as opposed to non-market risk. 3. Hence, the total risk of the security is the sum of market risk, and nonmarket risk,. 4. The CAPM specifies a relationship between market risk and the expected return on a security. 5. Also, with a comfortable income stream aside from this portfolio, you can afford to take on some market risk. 6. And trading companies can use so-called prudency reserves to protect against market risks, like the inability to exit a trading position at a good price. 7. As Cohen explained it, market risk is lower now than a year ago with stocks at their peaks. 8. A lack of warnings on market risk would be a real sign of trouble. 9. A global firm like Morgan can try to dodge this market risk by seeking far-flung buyers for the various securities. 10. Almost a year ago, regulators warned banks about the market risks of certain debt securities. |