Which of the following risks is typically lower than market risk in investments?

Credit risk is considered typically lower than market risk because it pertains specifically to the potential for loss due to a borrower's failure to make payments on debt, such as bonds or loans. While it is a significant risk for investors, particularly in fixed income or lending situations, it is usually less volatile compared to market risk, which affects the entire market and can lead to broader price fluctuations across asset classes.

Market risk encompasses factors that could cause the value of investments to decline due to changes in market conditions, volatility, economic shifts, or investor behavior. It operates on a macro level and impacts all securities within the market.

In contrast, credit risk is more specific and limited to individual issuers or borrowers. For instance, if a company defaults on its debt obligations, that will directly affect the price of its bonds but may not affect the entire market similarly. Hence, while credit risk can lead to significant losses, the systemic risk posed by market risk is generally more pronounced and variable, making it typically higher than credit risk.