Which of the following ratios would be a measure of market risk?
A)Nonperforming Loans/Net Loans
B)Net Loans/Total Assets
C)Cash and equivalents/Total assets
D)Equity Capital/Total Assets
E)None of the options is correct

Question

Quizplus · Accepted Answer

Market risk, also known as systematic risk, refers to the risk that affects the entire market or economy, not just a particular company or industry. It is typically measured by metrics that capture the volatility or sensitivity of an asset's or portfolio's value to overall market movements, such as beta in the case of stocks. The ratios listed (A, B, C, D) are more related to liquidity, leverage, and credit risk rather than market risk. None of the options provided directly measure market risk.

Which of the Following Ratios Would Be a Measure of Market