In the investment world, however, risk is inseparable from performance and, rather than being desirable or undesirable, is simply necessary. Understanding risk is one of the most important parts of a financial education.
Indices and index-linked investment products provide considerable benefits. But it is equally important to know the associated risk that comes as part of such exposure. Important concepts and terminologies are associated with Indices. For e.g. Beta helps us to understand the concepts of passive and active risk. Impact cost represents the cost of executing a transaction in a given stock, for a specific predefined order size, at any given point of time. These concepts are important for to understanding indices and investment opportunities.