Which risk is associated in an investment in real estates like land, house and lot and condominium units?*Market RiskInterest Rate RiskPurchasing Power RiskBusiness RiskFinancial RiskDefault RiskManagement RiskLiquidity Risk
Question
Which risk is associated in an investment in real estates like land, house and lot and condominium units?*Market RiskInterest Rate RiskPurchasing Power RiskBusiness RiskFinancial RiskDefault RiskManagement RiskLiquidity Risk
Solution
Investing in real estate such as land, houses, and condominium units is associated with several types of risks:
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Market Risk: This is the risk that the value of the property will decrease due to changes in the market conditions. For example, during a recession, the demand for real estate may decrease, leading to a drop in property prices.
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Interest Rate Risk: This is the risk that changes in interest rates will affect the cost of borrowing. For example, if interest rates rise, the cost of mortgage payments may increase, making the investment less profitable.
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Purchasing Power Risk: This is the risk that inflation will erode the value of the investment. For example, if the rate of inflation is higher than the rate
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