Types of Business Risk

Market risk refers to the fact that

• market prices are continually in a state of change.

• market rates are continually in a state of change.

• market prices and rates are continually in a state of change.

• market sentiments are continually in a state of change.

If market interest rates rise, the value of bonds will

• be significant

• be equal to zero

• increase

• decrease

Equity price risk refers to

• the volatility of currencies prices

• the volatility of market prices

• the volatility of stock prices

• the volatility of oil prices

general market risk and specific risk are two components of

• Foreign exchange risk

• Equity price risk

• Commodity price risk

• Credit Risk

General market risk _______ be diversified away, while specific risk ________be mitigated

• cannot______ can

• can ______cannot

• cannot______ cannot

• can ______can

Commodity price risk refers to the price volatility of

• Stocks, bonds, and securities

• Com services

• currencies

• precious metals, base metals, agricultural products, energy

The lack of trading liquidity tends to ___________the amount of price volatility

• decrease

• increase

• compensate

• deteriorate

a loss suffered by a party whereby the counterparty fails to meet its contractual obligations is a

• Business and Strategic Risk

• Liquidity risk

• Credit Risk

• Legal and Regulatory Risk

The potential nonpayment of interest and/or principal on a loan by the borrower is a

• Business and Strategic Risk

• Liquidity risk

• Reputation risk

• Default risk

The chance that a counterparty will stop operating completely is a

• Business and Strategic Risk

• Bankruptcy risk

• Reputation risk

• Default risk