principal risk

Principal Risk

The risk that an investment will decline in value below the amount one invested. For example, if one buys a security for $10 per share, there is a principal risk that it will decline to $8 per share and never recover. Principal risk is virtually non-existent for bank accounts, which are guaranteed by the FDIC up to a certain amount. However, it is significant for investments like stocks and, to a lesser extent, bonds.

principal risk

The possibility an investment will be worth less when it is sold than when it was purchased. Principal risk is high for common stocks compared to most fixed-income investments such as bonds, preferred stock, and certificates of deposit.
References in periodicals archive ?
Summary: Moody's also said that the principal risk to Banco de Chile's profit
The Financial Conduct Authority has announced that it has hired a former HBOS principal risk adviser, Karina McTeague, to lead its supervision of retail banking operations.
It may also be useful for those who are invested in bond funds with longer maturities but want to reduce the potential principal risk from rising interest rates.
As ever, our principal risk in the short term remains the threat of adverse market movements and it would be complacent, if not downright foolhardy, to assume increased stability in markets.
Uncertainties surrounding Egypt's political transition remain the principal risk we see facing investors," Citigroup said yesterday.
NORDIC BUSINESS REPORT-29 August 2006-Bluewater Insurance ASA chosen as principal risk supplier by EnterCard Norway(C)1994-2006 M2 COMMUNICATIONS LTD http://www.
For me, the EIA should earn more than a traditional fixed annuity or something with zero principal risk, because there's a greater risk of income dispersion," he said.
Stephen Haynes, principal risk reduction officer, said: "The impact that a deliberately set fire can have on a business can be devastating and of course will have a wider impact on the local economy and job prospects.
The composition of the disclosure committee will differ among companies, but generally would include the chief accounting officer, general counsel, chief investor relations officer, principal risk management officer and other company personnel with an interest in and expertise on disclosure matters.
The principal risk associated with the radiation dose resulting to a person from a CT procedure is the small possibility of developing a radiation-induced cancer some time later in that person's life.
During 1993 and 1994, D directed the Fund to invest several million dollars in debt instruments - principal risk securities - commonly known as derivatives.
On the other hand, you've taken some principal risk to the underlying portfolio, in addition to the credit risk of the portfolio and of the swap counterparty, as shown in the example.
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