Which of the Following Is Not a Form of Financial

question 38

Multiple Choice

Which of the following is not a form of financial risk?

• A) Exchange rate movements
• B) Inflation rates
• C) Blockage of fund transfers
• D) All of the above are forms of financial risk.

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Definitions:

Effective Interest Method

A way of amortizing the bond premium or discount over the life of the bond in a manner that reflects a constant rate of interest.

Bond Premium

The amount by which the market price of a bond exceeds its principal amount or face value, typically as a result of changes in interest rates.

Interest Expense

The expenses an entity faces for borrowing funds, encompassing payments for loans, bonds, or credit lines.

Effective Rate

Refers to the real rate of interest earned or paid on an investment, loan, or other financial product, adjusted for the effect of compounding over a given period.