Lucas Wants to Open His Own Health Food Store

Lucas wants to open his own health food store. He asks his friends, Laurie and Nick, to invest in his business to help him pay the start-up costs. He promises that he will pay them back in full from his profits in the first year. When considering whether or not to make this investment, Laurie and Nick consider how likely they are to receive the promised cash flows. What investment risk does this scenario best describe?

A) default risk
B) liquidity risk
C) return risk
D) price risk
E) inflation risk