Match the items of List-II with the items of List-I and select the correct matching. List-IList-II (a)…
Liquidity Risk is the inability to meet short-term obligations on time due to lack of ready cash (a-iv); Financial Risk is the inability to pay fixed financial…
Choose your answer
Match the items of List-II with the items of List-I and select the correct matching.
| List-I | List-II |
|---|---|
| (a) Liquidity Risk | (i) Refers to the chance that the firm will be unable to recover its dues from its debtors. |
| (b) Financial Risk | (ii) Refers to the possibility of adverse effect on firm’s assets, liabilities and income due to movement of interest rates. |
| (c) Exchange Risk | (iii) Refers to the firm’s inability to pay its dues towards creditors. |
| (d) Default Risk | (iv) Refers to the inability of the firm to meet its financial obligations on time owing to non-availability of ready cash. |
Answer and explanation
Correct answer C
Liquidity Risk is the inability to meet short-term obligations on time due to lack of ready cash (a-iv); Financial Risk is the inability to pay fixed financial obligations/dues to creditors arising from leverage (b-iii); Interest-rate/Exchange Risk refers to adverse effects on assets, liabilities, and income from rate movements (c-ii); and Default (Credit) Risk is the chance that the firm cannot recover dues from its debtors (d-i).
Practice for these exams
-
UGC NET Management