Which of the following is an example of an investment risk?

The potential loss of principal invested is a clear example of investment risk because it highlights the inherent uncertainty associated with investing. When individuals invest money, there is always a chance that they may not only fail to earn a return but could also lose some or all of their initial investment. This is particularly relevant in the context of various asset classes, where market fluctuations can lead to changes in value. Understanding this risk is crucial for investors as it emphasizes the importance of risk assessment and management strategies.

In contrast, fixed interest returns from bonds, guaranteed dividends on stocks, and high liquidity in money market accounts represent characteristics that mitigate investment risk or provide relative safety. Fixed interest returns and guaranteed dividends provide a level of predictability and assurance that investors will receive a certain amount of income. High liquidity in money market accounts indicates that funds can be accessed easily without significant delays or losses, further reducing risk associated with investment accessibility. Therefore, those options depict features rather than risks themselves.