which of the following risks is most closely associated with off balance sheet? trading risk

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: Which broadly ranks credit default risk from lowest to highest?     Conforming, CRA, subprime…

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

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 cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: What is financial risk? How is it related to business risk?

A: The financial risk is the risk which is related to the non-payment of the fixed financial charges.…

Q: Describe the procedure of Estimating Risky Cash Flows?

A: Risky cash flow means the future cash flow which falls short of the expectations. This shortage may…

Q: question is related to FINANCIAL RISK MANAGEMENT

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

Q: Define market risk

A: Market risk is the risk of an investment due to over all volatility in the market returns due to…

Q: What is The Relationship between Interest Rate Risk, Default Risk, and Risk Premiums

A: Risk refers to the chances of any changes in the prices of securities underlying with an investor…

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 is financial risk, and how does it arise?

A: Answer: Usually, financial risk refers to a situation where a company is not able to pay its fixed…

Q: How does risk affect interest rates?

A: The risk and the interest rates are in a direct relationship that is, the greater the risk the…

Q: How to analysis the Liquidity in Finacial Market analysis?

A: Liquidity is the availability of the current assets to fulfill the current liabilities of the…

Q: Define the term exposure to financial risk?

A: The question is based on the concept of Financial risk and its exposure.

Q: What is financial risk?

A: Risk refers to the undesired consequences arises due to the uncertainty. In other words, risk refers…

Q: What is Interest Risk and Cash Flow Risk?  What is the difference between Interest Risk and Cash…

A: Risk exists in all business operations and transactions however the business should take actions to…

Q: a) What is the general characteristics of Risk Financing – Risk Retention Methods

A: Hi, Thanks for the Question, Since you asked multiple questions, we will answer first question for…

Q: Market risk is referred to as: systematic risk. total risk. diversifiable risk. asset specific…

A: Market risk is the type of risk that affects the whole market. Market risk is not specific to a…

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: 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: When is the financial risk by far the most critical element to consider?

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: Which of the following risks is also known as market risk?  a.interest rate risk   b. systematic…

A: Market risk is the risk of a probability of loss for an entity due to factors which impact the…

Q: Could you explain the term "financial risk" in simple terms

A: Financial risk - The risk of losing money on an investment.

Q: Explain the difference between financial risk andbusiness risk.

A: Risk is referred as the chance of loss. An activity which leads to loss is termed as risk. The risk…

Q: Explain Interest Rates and Risk?

A: Interest Rate: Interest rate is the percentage of interest charge by a lender on his principal…

Q: What is the difference between Cash Flow Risk and Interest Rate Risk? Please explain it clearly so…

A: Risk is referred to as the possibility of putting oneself or someone in unfortunate…

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: Market risk arises from the level or volatility of market prices of assets. It involves the exposure…

A: Market risk is the chance of suffering losses as a result of price changes that are unfavorable for…

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: An example of asymmetr information in financial markets is that

A: Introduction: The term asymmetric information can be defined as a situation when the knowledge is…

Q: Explain the Hedging against cash flow risk.

A: Hedging is a strategy by which a financial instrument is used to minimize the risk created by the…

Q: What is liquidity black holes?

A: Liquidity is when assets can be easily traded in the market with no compromise in the price of the…

Q: discuss how a risk management tool can be used to mitigate liquidity risk and credit risk

A: The process of identifying, assessing, and controlling hazards to an organization's capital and…

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: risk transformtion in banks

A: Risk is a term that is used for defining the uncertainty arising in the future from changes in…

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: Compare speculative risk and pure risk.

A: Pure Risk is the possibility where there is loss or no loss. Speculative risk  is a possibility of…

Q: What is Interest Risk and Cash Flow Risk?

A: Risk exists in all business operations and transactions however the business should take actions to…

Q: Which are functions of financial markets? Check all that apply: O Maturity intermediation Risk…

A: Financial markets are important in the economy of country and they play very bigger role in the…

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: Distinguish between the real risk-free rate of interest, r*, and the nominal, or quoted,risk-free…

A: The interest rate is the cost of carry some loan or money. It will provide the income to the lender…

Q: What is the importance of market risk premium?

A: Market risk premium Variance of the market return and the risk-free rate. It depicts the equity…

Q: How are total risk, market risk, and diversifiable risk related?

A: There are different types of risk associated with the investment. Some can be controlled and some…

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.