Question of the Week – What is market risk?

Submitted by nsscadmin on Wed, 02/13/2019 - 10:00

We continue our series on investment risk today by looking at market risk.

Market risk is the risk that an investment will decline in value due to negative economic developments or other outside events, such as political turmoil, that affect the entire market. This can be sub-divided into equity risk, interest rate risk currency risk and commodity risk.

Equity risk applies to investments in shares. This is the risk of loss due to the drop in a market price of shares you have purchased.

Interest rate risk applies to debt instruments such as bonds. This is the risk of losing money due to a change in interest rates. For example, if the interest rate goes up, the market value of a bond could decline.

Currency risk applies to changes in foreign exchange rates. It is the risk of losing money due to the change in value of one currency in relation to another currency. For example, if you own stocks valued in U.S dollars and the U.S. dollar declines in value versus the Canadian dollar, your U.S. stocks will be worth less in Canadian dollars.

Commodity risk applies to the changes in prices of commodities such as oil or gold. This is the risk of losing money if you own a commodity in which the prices decline. For example, if you own gold coins and prices decline, your gold coins are less valuable.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.