Which risk is primarily associated with common stocks?

Market risk is the correct response because it refers to the potential for an investor to experience losses due to factors that affect the overall performance of the financial markets. Common stocks are inherently exposed to this risk because their values fluctuate based on broader market movements influenced by economic conditions, investor sentiment, and geopolitical events.

When market conditions shift, the prices of stocks can rise or fall, regardless of the company's individual performance. This systematic risk cannot be completely mitigated through diversification, as it affects a wide array of investments at the same time. Thus, market risk is a defining characteristic of stock investments, particularly common stocks.

Interest rate risk, while relevant to certain types of investments such as bonds, primarily affects assets sensitive to changes in interest rates rather than stocks directly. Liquidity risk is more related to the ease of buying or selling an asset without affecting its price and applies differently to various securities depending on their trading volume. Currency risk impacts investments in foreign stocks due to exchange rate fluctuations but is not a primary concern for domestic common stocks.