page_title: Risk factor (finance)
section_title: Financial risks in investing
hierarchical_section_title: Risk factor (finance) / Financial risks in investing
caption_attribution_description: English: Stock price listing numbers on a Korean newspaper 中文（繁體）‎: 韓國報章上的股價表
context_page_description: In finance, risk factors are the building blocks of investing, that help explain the systematic returns in equity market, and the possibility of losing money in investments or business adventures. A risk factor is a concept in finance theory such as the CAPM, arbitrage pricing theory and other theories that use pricing kernels. In these models, the rate of return of an asset is a random variable whose realization in any time period is a linear combination of other random variables plus a disturbance term or white noise. In practice, a linear combination of observed factors included in a linear asset pricing model proxy for a linear combination of unobserved risk factors if financial market efficiency is assumed. In the Intertemporal CAPM, non-market factors proxy for changes in the investment opportunity set.
  Risk factors occur whenever any sort of asset is involved, and there are many forms of risks from credit, liquidity risks to investment and currency risks.
  Different participants of risk factors contain different risk factors for each participant, for example, financial risks for the individual, financial risks for the Market, financial risks for the Government etc.
context_section_description: Investing is allocating money, effort, or time into something in hopes of generating income or profit. A common investment is investing in stocks, purchasing them at a low price then reselling it later at a higher price to earn the difference as profit. Stock investing comes with very high risks as every single piece of information would cause market prices to fluctuate.
caption: Stock price fluctuation
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