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Chapter 16: Managing Your Client’s Investment Risk

In this section

  • What Are Investment Risks?
    Explore the essential elements of investment risk, including systematic and unsystematic risk, different categories of risk, and how to match risk profiles with portfolio strategies.
  • Measuring Investment Risk
    Explore core metrics and strategies for quantifying investment risk, including standard deviation, beta, alpha, VaR, and risk-adjusted performance ratios.
  • How Diversification Can Reduce Investment Risk
    Explore how spreading investments across asset classes and regions can significantly reduce a portfolio’s vulnerability, with insights on correlation, asset allocation strategies, and regulatory considerations in Canada.
  • How to Use Options to Reduce Investment Risk
    Discover how protective puts, covered calls, and collar strategies can safeguard portfolios against market downturns, exploring implied volatility, option Greeks, and practical compliance considerations in the Canadian financial context.
  • How to Use Futures Contracts to Reduce Investment Risk
    Learn how futures contracts can help lock in prices and reduce exposure to market volatility through real-life examples, hedging strategies, practical tips, and personal insights.
  • How to Use Contracts for Difference to Reduce Investment Risk
    Learn how CFDs can hedge portfolios, offset price declines, and reduce investment risk in Canadian regulatory contexts—complete with examples, diagrams, and best practices.

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CSI / CIRO: CSC (1 & 2), CPH
Wealth: WME (1 & 2)
Mutual Funds: IFC
Portfolio: IMT (1 & 2), PMT, AIS
Derivatives & Options: DFOL
Governance: PDO
LLQP: LIF, A&S, SFA, EPP (CL/Québec) + Comprehensive
FINRA: SIE, 6, 7, 22, 57, 79, 82, 99
NASAA: 63, 65, 66
CFA: L1–L3 (heavy vignettes)
CPA Canada: CFE (D1–D3)
U.S. CPA: AUD modes
PMI: PMP
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