Match each type of non-systematic risk to the corporate scenario that best illustrates it.
- Credit (Default) RiskA corporation experiences severe cash flow shortfall and fails to make a scheduled interest payment on its outstanding debentures.
- Business RiskA specialized tech firm loses market share and operational profitability following the launch of a superior product by a major competitor.
- Liquidity RiskAn investor holding thin-market corporate debt is forced to accept a significant discount below intrinsic value to quickly liquidate the position.
- Regulatory RiskA chemical manufacturer incurs substantial operational compliance costs and margin compression after new emissions limits are enacted into law.
Cevap
Credit Risk matches the interest payment default scenario; Business Risk matches competitive market share loss; Liquidity Risk matches the need to sell at a steep discount due to thin trading; Regulatory Risk matches increased costs from new emissions laws.
Each non-systematic risk is correctly matched to its specific operational or market manifestation: failing to make scheduled debt payments represents credit (default) risk; losing market share due to competitive failure is business risk; inability to sell an asset promptly at fair value represents liquidity risk; and profit reduction resulting from new legislative mandates represents regulatory risk.
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Anahtar Kavram
Classification of Non-Systematic and Credit Risks