Asked by
Geo999 Williams
on Dec 02, 2024Verified
Which of the following is not a source of risk?
A) Liquidity risk
B) Deferred consumption risk
C) Maturity risk
D) Default risk
Deferred Consumption Risk
The risk associated with postponing consumption today in order to invest, with the potential of not having enough resources in the future.
Liquidity Risk
The risk that an entity will not be able to meet its short-term financial obligations due to the inability to quickly convert assets to cash without significant loss.
Maturity Risk
The risk that the value of a financial instrument will change due to a change in the absolute level of interest rates, sometimes referred to as interest rate risk.
- Differentiate between distinct risk premiums (default, maturity, liquidity) and analyze their influence on interest rates.
Verified Answer
JA
Learning Objectives
- Differentiate between distinct risk premiums (default, maturity, liquidity) and analyze their influence on interest rates.