Final answer:
In finance, 'risk' refers to the potential for loss, which can stem from various financial market changes such as natural disasters, wars, or economic fluctuations. An increase in the supply of money can increase the quantity of loans and lead to lower interest rates.
Step-by-step explanation:
In finance, risk is the potential for loss. The correct answer is e. Risk. Risk involves the exposure to a chance of loss or damage in the context of financial investments or business activities. The concept of risk is fundamental to finance as it is intricately linked with the potential return on investment; generally, the greater the risk, the greater the potential return. In economic terms, risks can also refer to economic risks over which individuals or companies have little control, such as natural disasters, wars, or widespread unemployment that can impact financial markets and individual livelihoods.
With respect to changes in the financial market, if there is an increase in the supply of money available for loans, this tends to lead to an increase in the quantity of loans made and received, as borrowing becomes more accessible and attractive due to the increased availability of funds. Conversely, an increase in the supply of available funds can also contribute to a decline in interest rates, because there is more money available to lend, thus making loans cheaper to obtain.