Understanding the Risks and Rewards of Investing

You've heard that investing can be risky, but what exactly are the risks? Why do some investments succeed while others fail?

The following examples demonstrate some of the potential pitfalls your investments might encounter.

Select the primary type of investment risk that corresponds to each of the given descriptions. $($Hint: These are not necessarily complete descriptions, but there is only one possible answer for each description.$)$

Description

CompWhiz is a tech company that initially sparked investor enthusiasm, resulting in a dramatic rise in share value after the initial public offering. In response to a rumor that the company's latest product contained a glitch, investors rushed to sell their shares, causing a sharp decline in the stock price.

A restaurant chain recently issued $$1,000,000$ worth of new stock shares, increasing its debt obligations in hopes of financing a new restaurant location. The construction of the new store ended up taking twice as long as anticipated, thus forestalling the expected increases in revenue. As a result, the company is having difficulty making the interest payments on its outstanding debt.

Real estate can be a valuable investment in times of price inflation, the higher the price level, the greater the value of the property. If the general price level declines, however, these investments can $q,$ lose significant value.

Please bold answers