Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

Q: How is the risk-adjusted discount-rate approach more commonly practiced in the real world?

A: Risk adjusted discount rate approach is an approach which is used in assessment of various long-term…

Q: What Is Hedge against Marketplace Uncertainty?

A: Hedging is referred as the risk management strategy used to offset losses in investments by taking…

Q: Is it true that current liabilities are riskier than long-term liabilities?

A: Liabilities: Liabilities are debt and obligations of a business. These are the claims against the…

Q: Which of the following risks can be eliminated through diversification? a. Systematic risk b.…

A: Idiosyncratic risk is a risk for a particular investment or company. It is also called unsystematic…

Q: Market risk cannot be eliminated. OA. True OB. False

A: The financial market can be defined as the market place which includes the trading of securities and…

Q: Which of the following is a counterbalanang error? O bond premium under-amortized understated…

A: The error that affects an income statement and the balance sheet account and could be automatically…

Q: All are items that can minimise credit risk, except. Guarantor  Mortagage Collateral  Pledge

A: The chance of a loss stemming from a borrower's failure to repay a loan or satisfy contractual…

Q: The unbiased expectations theory assumes investors are: A. Risk seeking В. Risk neutral C. Risk…

A: The theory assumes that the investors are risk neutral

Q: A type of risk where the issuer of the security will not pay interest or principal. *

A: Risk is defined as the probability with which an outcome or an investment in a security's actual…

Q: 1. In broad terms, why is some risk diversifiable? Why are some risks nondiversifiable? Does it…

A: Unsystematic risk is a risk that is distinctive to a particular firm or industry. Nonsystematic risk…

Q: liquidity risk?  Define briefly with an appropriate example

A: Risk means uncertainties in the future. There is a high risk involved in every investment because…

Q: What are contingent liabilities?

A: Liabilities by and large, are a commitment to, or it is an amount that one owes to another person.…

Q: is NOT a characteristic of a money market instrument. A. illiquidity B. short maturity C. low risk…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: to understand the topic better, the interest rate swap is defined as the contract between any two or…

Q: what is the difference between unsecured and secured transactions in terms of default

A: These types of transactions are based on the creditworthiness. These are loan or other credit…

Q: The Security Market Line plots _________ against ___________?

A: Systematic risk is the market risk or the undiversifiable risk which affects the overall market.…

Q: Marketable securities are also considered as liquid assets but not as liquid as cash. * Right O…

A: Correct answer: Right. Cash and the Marketable securities both are types of liquid assets. A liquid…

Q: (Based on Appendix 12B) When market rates of interest rise after a fixed-rate security is purchased,…

A: Held-to-maturity security: The debt securities which are held by the investor with intent to hold…

Q: For accounting purposes, what type of hedge is the forward contract? a. A cash flow hedge b. A…

A: A forward contract is a contract between the two parties in which both parties agrees to exchange…

Q: The slope of the security market line cannot be negative. Begin your answer with Consistent or…

A: The slope of the security market line is inconsistent with the market changes.

Q: The intrisic value of a security is based on which of the following items. I- amount of risk  II-…

A: Intrinsic value of a security is the present value of expected future cash flows, discounted with an…

Q: How can an investor eliminate Unsystematic Risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk. Systematic risk is non…

Q: What is the difference between pure arbitrage and risk arbitrage?

A: Pure arbitrage refers to make a riskless profit without taking any risk while risk arbitrage refers…

Q: Which of the following liabilities would be considered nonrecourse?

A: "As the student have not been given the options to choose the nonrecourse liabilities, I will give…

Q: What is meant by the phrase natural hedging againstexchange rate risk?

A: Hedging is a mechanism that is used to eliminate or minimize the risk of loss that is associated…

Q: identify the assumptions underlying the interest coverage ratio appropriate measure for analyzing…

A: The interest coverage ratio is a debt ratio and profitability ratio used only to calculate how…

Q: What is counterparty risk?

A: Counterparty risk can exist in trading, credit, investment.

Q: What is idiosyncratic risk? How does it differ from market risk?

A: Idiosyncratic risk or unsystematic risk or specific risk is that risk which belongs to specific…

Q: Derivatives are used in risk management because they _____. a. diversify risks b. hedge risks c.…

A: In the world of Finance, risk can be classified into various types, such as :- Credit risk - It is…

Q: Explain the interest rate risk?

A: The amount charged by a lender to a borrower for any type of debt is referred to as an interest…

Q: What are the three important questions concerning the uncertainty of liabilities?

A:

Q: 4 What is  counter party risk? Which financial contracts does it apply to?

A: The type of risk under which there are possibilities that either of the parties will not be able to…

Q: Risk mitigation tools used specifically by secured lenders are least likely to include detailed…

A: The question is based on the concept of credit assessment and credit risk management. The credit…

Q: Which is not the types of foreign risk Default risk O Price risk O Sovereign risk O transactional…

A: risk: it is probability of loss.

Q: What does it mean about credit risk has a “dark side”?

A: Credit risk is the possibility of loss or failure of payment of the loan by the borrower.…

Q: Which of the following is not a prudent practice in hedging against transactional exposures?   A.…

A: Transactional exposures mean the risk which involves in international trades. Risk of changing in…

Q: Explain current liabilities are riskier than long-term liabilities?

A: Liabilities:   A liability is a sum of money owed by the company towards external entities like a…

Q: risk with practical examples

A: Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make…

Q: Explain why a security is considered to be liquid and state its advantage to an investor

A: A liquid asset is a resource that can be quickly transformed within a short period of time into…

Q: Can default risks be adequately covered by the choice of a suitably high interest rate compared to…

A: Yes, Default risks can be adequately covered by choice of high interest rates in comparison to the…

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.