Market risk refers to the possibility of incurring large losses from adverse changes in financial asset prices such as stock prices. State True or False.

Practice question from NISM Series VII Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

True

Correct answer
B

False

Why this is the answer

Market risk arises from fluctuations in stock prices, interest rates, exchange rates, and commodity prices. It represents potential losses from adverse market movements caused by economic and political factors such as fiscal deficits, energy shocks, or rising interest rates.

Test yourself for real

Take a full NISM Series VII mock test.

Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.

NISM Series VII Mock Test 2