The risk premium is impacted by business risk,financial risk,and liquidity risk.

Question

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The risk premium is the additional return an investor requires for taking on riskier investments. This risk premium is impacted by various types of risks such as business risk (the risk that a company may not generate enough profits to meet its obligations), financial risk (the risk that a company may not be able to meet its financial obligations), and liquidity risk (the risk that an investor may not be able to sell an investment quickly). Therefore, the statement is true.

The Risk Premium Is Impacted by Business Risk,financial Risk,and Liquidity