________ is the potential exposure any individual firm bears that the second party to any financial contract will be unable to fulfill its obligation under the contract's specifications.
A)Inflation risk
B)Counterparty risk
C)Purchasing power risk
D)Swap agreement risk

Question

Quizplus · Accepted Answer

Counterparty risk refers to the risk that the other party in a financial contract may default or fail to fulfill its obligations. This can lead to potential losses for the affected party. In contrast, inflation risk refers to the risk of a decrease in purchasing power due to inflation, purchasing power risk refers to the risk of changes in the value of the currency, and swap agreement risk refers to the risk associated with entering into swap agreements.

________ Is the Potential Exposure Any Individual Firm Bears That