Risks of financial instruments

The risk analysis below provides a summary of the main types of financial instruments and the risks involved in investing in them. 

The list is not exhaustive and other factors than those mentioned there can affect the value of the financial instrument in question. In assessing whether a financial instrument is suitable for an investor, the following must be borne in mind:

  • The investors must have sufficient expertise and experience to evaluate the financial instrument in question.
  • The investor must be aware of the risks in connection with investing in the financial instrument concerned and the market where it is traded.
  • The investor must acquaint him-/herself with the terms and conditions which apply to the financial instrument concerned and the markets where it is traded.
  • The investor must be able to evaluate, either on his/her own or with the help of advisors, the impact which external factors, such as economic cycles, interest rate movements etc., can have on investments in the financial instrument concerned.

Financial instruments involve a variety of risks and before taking an investment decision it is important to become acquainted with the nature of the financial instrument in question and the risks connected to it. Emphasis is placed on having investors never undertake transactions with financial instruments without being fully aware of the risk involved, having regard their financial strength and experience of such investments.