The Underlying Cause of Risk in fiNance Is

question 163

Multiple Choice

The underlying cause of risk in finance is

• A) danger.
• B) uncertainty.
• C) fear.
• D) complexity.

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Definitions:

Break-Even Point

The point at which total costs and total revenue are equal, meaning the business is not making a profit or a loss.

Net Loss

The amount by which expenses exceed revenues, indicating a negative profit.

Margin of Safety Percentage

A financial metric indicating the amount by which sales can drop before reaching the break-even point.

Fixed Expenses

are costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance premiums.