SIE practice questionmediumFinancial risk
If rising debt expenses cause a corporation to experience cash flow problems, what risk is being realized?
- AMarket risk
- BInterest rate risk
- CFinancial risk✓ Correct answer
- DCurrency risk
Explanation
Why C — Financial risk
Financial risk stems from the use of debt and the chance of being unable to meet financial obligations. The other risks are unrelated to leverage.
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