Refers to the inability of the business to meet its obligations as they mature on account of insufficient resources. A. Default risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk

Q: A process that create a financial position that offsets the risk of an ongoing business process is…

A: Transfer of risk: Transfer of risk is one the strategy for risk management. This involves transfer…

Q: The sensitivity of a stock to market risk affected by currency movements is known as the    a.…

A: Answer with explanation are given below:

Q: The higher the _____________, the higher the financial risk, and the higher the ____________. a.…

A: Interest rates and price of bonds has reverse relationship. With increase in interest rates, the…

Q: Which of the following transactions would result in an increase in capital employed? A. Paying a…

A: Capital Employed means amount of capital being invested in the business. This is also known as…

Q: Systemic risk is a) credit risk. b) an insurance contract against the default of one or more…

A: Systemic risk refers to the risk of widespread disruption or collapse of an entire financial system…

Q: 1.Financial distress is least apt to lead to A. Increase dividends B.financial restructuring…

A: Financial distress may result in asset restructuring, stock issuance, liquidation, and financial…

Q: The business holds cash, treasury notes, and corporate bonds. It is exposing itself to interest rate…

A: Since business is exposing itself to interest rate risk, it is ready to bear or accept risk.

Q: Which of the following is a characteristic of a money market financial instrument?

A: Money market financial instruments are those instruments which have short maturity period of up to a…

Q: Which of the following is the risk due to a firm's debt usage?      Business risk     Financial…

A: The investments that we make in debt, equity and other financial securities are exposed to different…

Q: Leverage is a. The ability to earn a satisfactory return on the investments in the business. b.…

A: Leverage is the ability to pay debt.

Q: Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative…

A: Insolvency Risk: Insolvency risk is a probability that an enterprise cannot satisfy its debt…

Q: Negative cash flow to creditors

A: The 3 main components of the cash flow statement are as follows: Cash from operating activities…

Q: Off-Balance Sheet Activities do not have a direct impact on the financial stability or risk of a FI.…

A: Off-Balance Sheet Activities  are those assets and liabilites that do not appear on the balance…

Q: Minimizing liquidity is an excellent way to meet a company's short-term financial obligations. 1)…

A: Liquidity means ability of the company in paying its short term obligations or liabilities.…

Q: What is the purpose of financial leverage in finance? a) To increase the company's liquidity b) To…

A: Financial leverage means use of borrowed funds or debt to finance investments or operations.…

Q: The possibility that a business may not be able to repay a bank loan because of an economic downturn…

A: Risk management is the process of identifying, assessing and controlling threats to an…

Q: These are ways in which depository financial institutions measure liquidity risk except: a. Liquid…

A: Liquidity risk refers to the risk associated with the business not paying off its liabilities in the…