Define relevant risk

Q: Define asset-backed security

A: Answer: Asset backed security is nothing but a security is made up of other financial securities.…

Q: Define then discuss Value-at-Risk.

A: The stock market is full of new policies and procedures. It get impacted by change in the government…

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: Distinguish between inherent risk and control risk

A: Inherent risk: Inherent risk measures the auditor’s assessment of the susceptibility in a material…

Q: isk can be separated into undiversifiable risk and diversifiable risk. Discuss the difference…

A: In market there are many types of risk involved but broadly there are two types of risk…

Q: Define default risk

A: Default risk: It is the threat or risk of a bank taking on the plausibility that a borrower will not…

Q: Hedging is used to deal with three areas of risk exposure. Which are those risks? Name them.

A: Following are the three areas of risk exposure: Transaction risk: Transaction risk alludes to the…

Q: How one can identify the respective Loss Exposures in Risk

A: The degree of uncertainty and/or potential financial loss connected with an investment choice is…

Q: Discuss some of the techniques available to reduce risk exposures.

A: Risk exposure is the estimated potential loss from ongoing or upcoming business operations. The…

Q: Explain what is risk decompositon

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

Q: Define . Slope of SML and its relationship to risk aversion

A: Introduction: SML refers to security market line, it is a line indicating the relationship between…

Q: inherent risk

A: Inherent risk is the risk of errors or frauds that may occur irrespective of the operation of…

Q: Define Risk in general

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

Q: Define diversifiable risk

A: Diversifiable risk It is special to a given business or industry. Regularly known in the feeling of…

Q: Define certainty equivalent method

A: Certainty equivalent method: Certainty equivalent method is a risk analysis technique used in…

Q: quantitative risk analysis:

A: Quantitative risk analysis assess the risk associated with a particular monetary item.

Q: Describe Detection Risk.

A: Risk: It is the uncertainty about the future events of the company. The adverse chances of choosing…

Q: Describe Inherent Risk.

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

Q: Describe Control Risk

A: Audit Risk: The risk of issuing an unqualified audit report due to failure in detecting material…

Q: Briefly define and give examples of each of the following components of total risk. Which type of…

A: Risk refers to the variability of returns. It is the possibility or the likelihood that the actual…

Q: Explain political risk

A: Political risks are important to be considered because they have an impact on the profitability…

Q: Define Operational risk.

A:

Q: How are total risk, nondiversifiable risk, and diversifiable risk related? Why is nondiversifiable…

A: Total risk is measured by the standard deviation of returns; it has two elements non-diversifiable…

Q: audit risk.

A: First option is wrong because the inherent risk is the risk of material misstatements that may exist…

Q: Explain the importance of pooling anddiversification for managing risk.

A: Pooling of risk can be defined as the spread of financial risk evenly among a large number of…

Q: Distinguish between: Systematic risk and Unsystematic risk

A: The risks faced by the company arises from both micro as well as macro levels. The risk arising out…

Q: Discuss some of the techniques available to reduce risk exposure.

A: Risk exposure means possible losses which can be occur in future due to specific projects or…

Q: (a) Define risk-free asset

A: An asset which generally having certain future returns and there is no chance of loss in return is…

Q: Define risk

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

Q: Provide a comprehensive definition of risk

A: Risk is described in financial terms as the probability that the actual gains of an event or…

Q: Briefly explain the main purpose of Risk Governance Framework (RGF)

A: Every organisation maintains risk governance framework.It has certain objectives and purposes in…

Q: Define Ethics.

A: Ethics are a set of moral principles they affect how people in a society make decisions and how…

Q: Define underinvestment problem

A: Underinvestment refers to the situation where company or firm has insufficient investment or can…

Q: Define risky event

A: Risk is the variability in expected return and the actual return. When the actual return is more…

Q: Define the term assurance.

A: Assurance: Assurance is a financial coverage that delivers payment for an occurrence that is sure to…

Q: = preventive controls™

A: 1st option is wrong because it can not be ensured that preventive controls are 100% effective. 2nd…

Q: What are going-concern uncertainties?

A:

Q: Distinguish between diversifiable and non-diversifiable risk

A:

Q: Differentiate between systematic and unsystematic risks.

A: Risk refers to the chances or probability of losses due to uncertain situations or conditions. In…

Q: Define conditional value at risk (CVaR)

A: The question is based on the concept of conditional value at risk , it is a risk assessment process.…

Q: Distinguish between exposure and risk.

A:

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…

Q: Define value at risk (VaR)

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.