RISK ATTACH WITH FINANCIAL ASSETS

The first is the risk attached to potential purchasing power of the expected cash flow. This is called purchasing power risk or inflation risk. the second risk that the issuer or borrower will default on obligation . This is called credit risk or default risk . Finally for financial assets whose cash flow is not determined is U.S dollars there is risk that the exchange rate will be change adversely , resulting in less U.S dollars . this risk is referred to as Foreign Exchange risk.