Which Risk Do Experts Generally Agree Is the Most Important

question 16

Multiple Choice

Which risk do experts generally agree is the most important for firms and why?

• A)Economic risks because the economy is a primary determinant in the success of a firm.
• B)Currency risks because all firms deal in currencies.
• C)Transaction risks because transactions are where firms make their profits or suffer their losses.
• D)Interest rate risks because interest rates affect firms in a number of different ways.

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Definitions:

Rate of Return

The percentage of net gain or loss on an investment over a specified time period.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting the operational activities.

Annual Payment

A recurring payment made once a year for a variety of purposes, including loan repayments, leases, and annuities.

Perpetuity

A type of annuity that pays a fixed amount of money to an individual indefinitely, without a termination date.