The risk that the firm will not have,or be able to raise,the cash required to meet the margin calls on its hedges is called:
A)liquidity risk.
B)basis risk.
C)commodity price risk.
D)speculation risk.

Question

Quizplus · Accepted Answer

Liquidity risk refers to the risk of not being able to meet the financial obligations of a company, such as margin calls on hedges. If the firm cannot raise the cash needed to meet these obligations, it could face serious financial consequences.

The Risk That the Firm Will Not Have,or Be Able