Which of the following defines financial risk?
A) The risk that the financial system may collapse because of a loss of confidence
B) The additional variability in returns to shareholders that arises because the financial structure contains debt
C) The additional variability in returns to stock market investors because of systematic risk
D) The risk to which an investor is exposed when purchasing a financial security

Question

Quizplus · Accepted Answer

Financial risk is the additional variability in returns to shareholders that arises because the financial structure contains debt. It is the risk that a company may not be able to meet its financial obligations, resulting in financial losses for investors.

Which of the Following Defines Financial Risk