Exercise 2.1. bull market, 2. current account, 3. default, 4. emerging markets, 5. globalization, 6. International Financial Corporation, 7. monetary policy, 8. systemic risk, 9. World Bank.

Counterparty risk – risk that a counterparty to a purchase or sale may fail to discharge his obligations.

Country (sovereign) risk – the hazard that political risk may arise in the country of operations.

Credit (repayment) risk – risk of a payer’s or a borrower’s failure to meet commitments.

Currency (exchange, trading, translation, transaction) risk – the risk, attaching to securities deals denominated in foreign currencies, that unforeseen exchange rate changes may affect balance-sheet value in the home currency or income amounts in the home currency.

Default risk – risk of a counterparty’s failure to make payments or repayments of interest or principal on the due date.

Delivery risk – risk that a party to a deal fails to make the contracted delivery.

Inflation risk – risk of devaluation of assets or incomes because of price hikes.

Interest rate risk – risk of losses because of changes in interest rates.

Liquidity risk – the risk in securities trading that the price of a security may fluctuate excessively owing to the lack of a sufficient volume of trading in the market.

Market risk – risk that an asset price drops and its owner incurs losses while selling the asset.

Operational risk – risk of careless or unprofessional actions of management resulting in losses.

Political risk – the risk of an adverse change in official policy such as in regard to taxation, tariffs, quotas, currency control, foreign ownership, nationalization, interest rates, etc.

Price risk – risk of changes in commodity or financial instrument prices over time.

Reinvestment risk – uncertainty about the future level of returns and interest rates after the current investment expires.

Systematic risk – risk that is characteristic for all securities of a given class and cannot be eliminated through portfolio diversification.

Systemic risk – a situation when problems in any one financial institution or market may spread, widely endangering the whole system.

Exercise 4.economy, US dollar terms, account for, worth, GDP, appreciation, exchange rates, average, shift, growth rates, individuals, per capita, spending, assumption, projections, challenges, forecasts, implications, pattern, activity, engine, demand, offset, ageing, returns, advanced, weight, portfolios, flows, currency, incomes, pricing, commodities, opportunities, global, strategic, list, richest