Explain the Four Ways of Managing Risk

question 75

Essay

Explain the four ways of managing risk.

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Definitions:

Realized Gain

The profit made from the sale of an asset or investment when it is actually sold, not just on paper.

Available-for-sale Securities

Financial assets that are intended to be sold before they reach maturity or are needed to fund specific obligations.

Interest Revenue

Income earned on investments, loans, and other interest-bearing financial instruments, recorded as revenue in the income statement.

Debt Trading Securities

Financial instruments that involve debt and are actively bought and sold on markets with the aim to profit from price movements.