Non-systematic risks represent unique hazards associated with specific issuers or business sectors. Match each type of non-systematic risk on the left with the corporate scenario on the right that best illustrates it.
- Credit RiskAn issuer of corporate debentures defaults on its scheduled coupon payments following an abrupt drop in operating cash flows.
- Business RiskA retail clothing chain suffers a severe loss of earnings due to poor management decisions regarding seasonal product inventory.
- Liquidity RiskAn investor holding a niche, unlisted corporate bond must accept a steep price discount to convert the position into cash quickly.
- Operational RiskA financial firm incurs substantial financial losses resulting from an internal cybersecurity breach and system outage.
Cevap
Credit Risk matches the debenture default scenario; Business Risk matches the retail inventory management decision scenario; Liquidity Risk matches the unlisted bond discount scenario; Operational Risk matches the cybersecurity breach scenario.
Each non-systematic risk corresponds to a distinct issuer-specific vulnerability: Credit risk is default on debt obligations; Business risk originates from executive decision-making and firm strategy; Liquidity risk involves secondary market execution friction; Operational risk reflects technology and administrative control failures.
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Anahtar Kavram
Non-Systematic and Credit Risks