Business risk is comprised of (a) price risk, (b) credit risk and (c) pure risk Defined...

Business risk is comprised of (a) price risk, (b) credit risk and (c) pure risk Defined these terms and give an example of each.

Expert Solution

Conducting business is risky due to the fact that the environment in which it operates is dynamic in nature and keeps on changes, it is never static. Some of the key risk are price risk, credit risk and financial risk, these can be defined as follows:

Price risk: It refers to the risk of price volatility in some of the essential commodities on which business is based upon, for example an oil producing company faces the risk of oil prices volatility which directly impacts profit as well as losses of the organization.
Credit risk: It refers to the risk of loss of credit which is owed by the company with others. For example, the risk of trade receivables, due to reasons beyond control of the organization, such credit may not be paid by the debtors which creates a credit risk for the organization.
Pure risk: It refers to the risk that can only result in losses to the company, usually such risk are those which is caused due to natural factors like earthquake, bad weather, fire etc.

jeff jeffy answered 6 months ago

Commercial Paper is subject to: a. credit risk b. maturity risk c. A and B d....

Commercial Paper is subject to: a. credit risk b. maturity risk c. A and B d. none of the above

( a)Outlinethe principal differences between speculative risk and pure risk . ( b)Explain which of the...

( a)Outlinethe principal differences between speculative risk and pure risk . ( b)Explain which of the above risk is more commonly associated with insurance policies and provide examples of the insured risks

Let a < c < b, and let f be defined on [a,b]. Show that f...

Let a < c < b, and let f be defined on [a,b]. Show that f ∈ R[a,b] if and only if f ∈ R[a, c] and f ∈ R[c, b]. Moreover, Integral a,b f = integral a,c f + integral c,b f .

1) the social-cultural domain is comprised of: a. ethnocentrism and socialization b. enculturation and assimilarion c....

1) the social-cultural domain is comprised of: a. ethnocentrism and socialization b. enculturation and assimilarion c. evolution and accommodation d. socialization and enculturation 2) a child who is frequently punished at home has a tendency to become__ a. more aggressive b. less aggressive c. well-behaved d. envious 3) What biological factor has been suggested as influencing early sexual behavior ? a. the increase in tue average age of puberty b. the decline in the average age of pubert c. the...

Water is a/an _______ a) Element b) Compound c) Pure substance d) Mixture

Water is _______ a) An element b) A compound c) A pure substance d) A mixture

How is this defined, what steps does it take to manage it financial risk in these areas: commodity price risk, foreign currency exchange risk, equity security price risk, and interest rate risk?

Starbucks defines market risk in its 10-K. How is this defined, what steps does it take to manage it financial risk in these areas: commodity price risk, foreign currency exchange risk, equity security price risk, and interest rate risk? (Look in SEC EDGAR site).

Portfolio Return Risk A & B 1.64% 4.49% B & C 1.59% 3.54% A & C...

Portfolio Return Risk A & B 1.64% 4.49% B & C 1.59% 3.54% A & C 1.62% 4.77% C & D 1.15% 3.66% A & D 1.21% 4.59% B & D 1.18% 3.30% Q1. By computing the ratio of (R_p/?_p ) select the best investment that you should undertake, assuming you are a risk averse investor. Explain the rationale for your choice of investment. Q2. Draw a portfolio graph (showing Risk on the X-axis and Return on the Y-axis) for...

Which of the following does not impact your risk premium? A. Tenant Credit Risk B. Treasury...

Which of the following does not impact your risk premium? A. Tenant Credit Risk B. Treasury Rates C. Liquidity D. All the above impact your risk premiums

The molality of pure water is (a) 55.5 (b) 50.5 (c) 18 (d) 60.5

The molality of pure water is _____ (a) 55.5 (b) 50.5 (c) 18 (d) 60.5

The rate of reaction is defined as Rate = −1∆[A] = −1∆[B] = + 1∆[C] =...

The rate of reaction is defined as Rate = −1∆[A] = −1∆[B] = + 1∆[C] = +1∆[D] ?? ∆?? ?? ∆?? ?? ∆?? ?? ∆?? Average rate: the change in measured concentrations in any particular time period Instantaneous rate: the change in concentration at any one particular time Generally, the greater the concentration of reactant molecules, the faster the reaction Increasing temperature increases the reaction rate for most reactions Questions 1: Table I displays some data relating to an experiment...

Question