finman Quiz 3

What is considered a business risk?

• Only legal issues

• Only operational failures

• Only financial losses

• Anything that threatens a company’s ability to achieve its financial goals

What type of risk is caused by flawed processes or events that disrupt business operations?

• Operational risk

• Unsystematic risk

• Financial risk

• Systematic risk

Which of the following is NOT a category of operational risk?

• People risk

• Process risk

• Market risk

• Legal and compliance risk

What is an example of operational risk?

• Market fluctuations

• Employee errors

• Interest rate changes

• Currency exchange rates

What does financial risk refer to?

• The risk of losing money due to market changes

• The potential future situation that causes a business to lose money

• The risk of operational failures

• The risk of legal non-compliance

Which type of financial risk is caused by economic uncertainties?

• Operational risk

• Market risk

• Credit risk

• Liquidity risk

What is systematic risk also known as?

• Financial risk

• Operational risk

• Market risk

• Specific risk

What does a beta greater than one indicate?

• Lower volatility than the market

• Equal volatility to the market

• Higher volatility than the market

• No volatility

What is unsystematic risk?

• Risk that cannot be diversified

• Risk that affects all companies equally

• Risk unique to a specific company or industry

• Risk inherent in the market

Which of the following is a measure of risk?

• Profit margin

• Revenue growth

• Market share

• Standard deviation