Financial Risk

The potential of either gaining profits or losing your capital

• risk

• dividends

• stocks

The possibility of losing all or part of your investment is known as

• asset allocation

• compounding

• return

• risk

This is considered an IOU and the higher the interest rate (or coupon rate) on this, the more risky it is

• Bond

• T-bill

• Money market

• Stocks

Interest rate risks would be most relevant to what purchase?

• a sweater

• patio furniture

• airline tickets

• a house

The potential of losing money in an investment due to market fluctuations is known as

• A) Market Risk

• B) Credit Risk

• C) Operational Risk

• D) Liquidity Risk

Which type of risk involves the chance that a borrower will default on a loan?

• A) Market Risk

• B) Credit Risk

• C) Operational Risk

• D) Liquidity Risk

The risk that an asset cannot be sold quickly enough in the market to prevent a loss is called

• A) Market Risk

• B) Credit Risk

• C) Operational Risk

• D) Liquidity Risk

What type of risk is associated with the failure of internal processes, people, or systems?

• A) Market Risk

• B) Credit Risk

• C) Operational Risk

• D) Liquidity Risk

The risk of loss due to changes in interest rates is known as

• A) Market Risk

• B) Interest Rate Risk

• C) Credit Risk

• D) Liquidity Risk

Which risk is related to the possibility of a government defaulting on its debt?

• A) Sovereign Risk

• B) Market Risk

• C) Credit Risk

• D) Liquidity Risk