Of the Following, Which Risk Is Most Likely to Be

question 42

Multiple Choice

Of the following, which risk is most likely to be managed with the use of derivative contracts?

• A)Liquidity risk
• B)Funding risk
• C)Credit risk
• D)Market and interest rate risks
• E)Operating risk

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Definitions:

Operating Expenses

The costs associated with running a business day-to-day, excluding the cost of goods sold. This includes expenses such as rent, utilities, and payroll.

Merchandise Creditors

Suppliers or vendors to whom a company owes money for inventory purchased on credit.

Current Liability

A current liability is a company's short-term financial obligation that is due within one year or within the normal operating cycle.

Current Asset

Assets expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of a business, whichever is longer.