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Zorluk: Çok zorNon-Systematic and Credit Risks

Match each corporate or municipal investment scenario to the specific non-systematic risk type it most accurately illustrates.

  • An investor holding corporate debentures suffers financial loss when the issuing firm files for bankruptcy and fails to make its scheduled coupon payment.Credit (Default) Risk
  • A specialized biotech company sees its stock price fall by 40% after its sole drug candidate fails clinical trials, while broad equity market indices rise.Business Risk
  • An institutional holder of unrated industrial development revenue bonds must accept a substantial price discount below fair market value to execute an immediate sale.Liquidity (Marketability) Risk
  • An investor holding high-coupon corporate debt receives principal repayment prior to maturity following a sharp decline in prevailing interest rates, forcing reinvestment into lower-yielding bonds.Call Risk

Cevap

The correct matches pair default on corporate debentures with Credit (Default) Risk; single-product drug trial failure with Business Risk; forced discount on unrated municipal bonds with Liquidity Risk; and early redemption of high-coupon debt with Call Risk.
Each scenario illustrates a distinct non-systematic risk factor. Failure to pay debt obligations stems from credit (default) risk. Company-specific operational failure represents business risk. Inability to sell securities quickly without taking a significant price concession reflects liquidity risk. Early redemption of fixed-income securities by the issuer when interest rates drop embodies call risk.

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1
Analyze the financial failure scenario involving issuer non-payment of interest and principal.
Identified as Credit (Default) Risk, which specifically addresses insolvency and failure to meet debt service obligations.
Credit risk pertains directly to the financial solvency of the debt issuer.
2
Analyze the firm-specific product failure scenario impacting stock price independently of the market.
Identified as Business Risk, which stems from operational decisions, product failure, or management execution.
Non-systematic risks tied to company operations are categorized as business risk.
3
Analyze the secondary market transaction scenario involving execution delays and price concessions.
Identified as Liquidity (Marketability) Risk, which arises when secondary trading volume is insufficient for quick conversion to cash at fair value.
Unrated or niche issues typically suffer from limited secondary market liquidity.
4
Analyze the early bond redemption scenario triggered by declining interest rates.
Identified as Call Risk, where issuers retire debt early to refinance at lower rates, exposing investors to reinvestment risk.
Callable bonds carry specific risk exposure to premature debt retirement during falling rate cycles.

Anahtar Kavram

Classification of Non-Systematic and Credit Risks
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Non-Systematic and Credit Risks

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