CFA Practice Question

CFA Practice Question

Which source of risk is the uncertainty introduced from possible unstable income flows?
A. financial risk
B. business risk
C. liquidity risk
Explanation: The more uncertain the income flows into a company, the more uncertain the income flows to the investors. The investor will then demand a risk premium based on this uncertainty.

User Contributed Comments 4

User Comment
feier why not financial risk? Unstable income=higher risk of defult
sarath financial risk = risk from the choice of financing...
Birdy101 what is wrong with liquidity risk?
pjdeschenes I think liquidity risk is the risk of not being able to sell/buy an asset. That is the there is not much of a market, and the bid-offer spread is large.
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