Question

Xyz corporation has suffered a major downturn in business and will not be able to pay interest on its bonds. this is an example of ____ risk.
a. ​financial

b. ​market volatility

c. ​interest rate

d. ​marketability

Answer 1

Answer:

The correct answer would be option A, Financial.

Explanation:

Xyz corporation has suffered a major downturn in business, and will not be able to pay interests on its bonds. This is an example of Financial Risk.

When companies or corporations face downturns in business, they actually encounter financial losses which in turn will affect the corporation and the shareholder or stockholders or bond holders. People who invested in the bonds of the company will not be able to get interests on their investments with the corporation. This is because the corporation is suffering financially and can't pay money or interest to the bond holders. This is a true financial risk for the investors as well as for the corporation.