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. |