Explain Contraction risk?

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: Explain renewal probability?

A: Answer: Renewal probability is nothing but the average percentage of renters in a building that is…

Q: What is the best-case scenario?

A: When companies are uncertain about the details of a project such as costs, inflows, interest rate…

Q: What is Scenario Analysis?

A: Scenario analysis is an important step in the financial modelling. This is used to show the possible…

Q: explain what is the risk-return principle with one example

A: The risk-return principle is a fundamental concept in finance that states that the potential return…

Q: Explain what is risk decompositon

A: Risk is referred as the future uncertainty with reference to the deviation from an expected earnings…

Q: Why do we need stress testing and scenario analysis?

A: A stress test or scenario analysis is used to determine and analysis the outcome of a financial…

Q: Explain HPRs and Inflation?

A: Answer: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: What Does RiskReally Mean?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: Define Risk in general

A: In finance, risk is defined as the level of vulnerability that potentially creates financial loss…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: Consider REMICs?

A: A real estate mortgage investment conduit (REMIC) is a difficult puddle of mortgage securities…

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: Explain the difference between a linear risk and a nonlinear risk.

A: Linear risk is an enterprise's risk, based on the traditional economic system of "take-up-dispose."…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: Explain the Trade-Off between Risk and Reward?

A: The trade-off means to lose one thing to achieve another thing. For example An organization is…

Q: Calculate the risk neutral probability

A: Risk neutral probability = (er*Δt - d)/(u-d) r is risk free rate. Δt is time period between each…

Q: Define uncertainity ?

A: "Uncertainty" in accounting refers to the difficulty of predicting outcomes because of limited or…

Q: Define risk

A: Risk can be defined as whenever there are chances that the investments’ actual outcomes are…

Q: How is VaR used to limit risk?

A: Value at Risk (VaR) a statistical tool which measures and quantifies financial risk a firm or…

Q: What is hurdle rate?

A: Hurdle rate a rate usually used in capital budgeting decisions to calculate the acceptability of a…

Q: What risk does Beta measure?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk 1. Systematic risk : It is…

Q: Define a risk event.

A: Risk Event:  When an event can cause losses to the company's stakeholders and investors due to…

Q: risk with practical examples

A: Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make…