Question

Describe the nature of the following major categories of risk (1) Financial Risks (2) Political Risks (3) Environmental Risks​

Answer 1

Financial risk generally relates to the odds of losing money.

The financial risk most commonly referred to is the possibility that a company's cash flow will prove inadequate to meet its obligations.

Financial risk can also apply to a government that defaults on its bonds.

Credit risk, liquidity risk, asset-backed risk, foreign investment risk, equity risk, and currency risk are all common forms of financial risk.

Investors can use a number of financial risk ratios to assess a company's prospects.

Market risk, or systematic risk, affects the performance of the entire market simultaneously.

Market risk cannot be eliminated through diversification.

Specific risk, or unsystematic risk, involves the performance of a particular security and can be mitigated through diversification.

Market risk may arise due to changes to interest rates, exchange rates, geopolitical events, or recessions.

Step-by-step explanation:

Answer 2

Market riskinvolves the risk of changing conditions in the specific marketplace in which a company competes for business. One example of market risk is the increasing tendency of consumers to shop online. This aspect of market risk has presented significant challenges to traditional retail businesses.

Step-by-step explanation:

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