What is generally a result of market risk?

Market risk, also known as systematic risk, refers to the potential for investors to experience losses due to factors that affect the overall performance of the financial markets. This encompasses a variety of elements such as economic downturns, changes in interest rates, geopolitical events, and significant social changes that influence market dynamics as a whole.

When investors engage with the markets, they inevitably expose themselves to fluctuations in asset prices driven by these broader market conditions. Thus, the potential for losses in response to market changes is intrinsic to market risk. The unpredictability of these shifts means that even well-researched or fundamentally strong investments can lose value if the overall market declines.

In contrast, other options reflect scenarios that do not align with the realities of market risk. Guaranteed investment returns are not a characteristic of market risk, as investments inherently carry the possibility of losing value. Stability in asset prices would imply a lack of market risk, as it suggests that prices are not subject to the shifts that define market fluctuations. Lastly, the elimination of trading fees pertains more to investment transaction costs rather than the risks associated with market movements.