Question

Financial risk refers to the: Multiple Choice general business risk of the firm. risk of owning equity securities. risk faced by equity holders of firms with debt. the risk that the share price may not reflect all known information. possibility that interest rates will increase.

Answer 1

Financial risk refers to the option (C) i.e, risk faced by equity holders of firms with debt.

What is financial risk?

The possibility of financial loss in an investment or commercial enterprise is known as financial risk. Credit risk, liquidity risk, and operational risk are a few of the more typical and distinct financial risks.

Financial risk is a type of risk that could cause interested parties to lose money. This may result in governments losing control over monetary policy and defaulting on bonds or other debt obligations. Corporations may fail in an endeavor that places a financial burden on the company, in addition to the danger of defaulting on debt they take on.

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