Investment Primary Risk CompWhiz is a tech company that initially sparked invest

Question

Investment Primary Risk CompWhiz is a tech company that initially sparked investor enthusiasm, resulting inL a dramatic rise in share value after the initial public offering. In response to a rumor that the company's latest product contained a glitch, investors rushed to sell thei shares, causing a sharp decline in the stock price. WheatWorld is a company that distributes whole-grain cereals to major grocery stores across the country. A headline science news story points out that in the course of human evolution, only recently did humans begin to eat processed grains, and our bodies may not be well adapted to processing them In some markets there are many buyers and sellers, such that it is relatively easy to cash-in an investment at any given time. In thin markets, however, it may be difficult to find a buyer in a timely manner, forcing the seller to lower the price and lose money on the investment.

Explanation / Answer

FIRST ANSWER : MARKET RISK

MARKET RISK IS RISK ARISING DUE TO FLUCTUATIONS IN FINANCIAL ASSETS. HERE WE ARE TALKING OF SHARES. DUE TO RUMOURS, PRICE HAS FALLEN, WHICH IS AN EXAMPLE OF MARKET RISK.

SECOND ANSWER : BUSINESS RISK

BUSINESS RISK ARISES WHEN YOU SEE THAT YOUR BUSINESS IS LOSING CUSTOMERS WHICH LEADS TO LOWER SALES & SO YOU ARE NOT ABLE TO GENERATE ENOUGH REVENUE TO RUN BUSINESS

THIRD ANSWER : LIQUIDITY RISK

WHEN WE ARE NOT ABLE TO SOLD ASSET EASILY IN MARKET, WE FACE LIQUIDITY RISK. IT MEANS WHEN WE ARE IN NEED OF MONEY, WE HAVE TO SELL AT LOWER PRICE TO REALISE MONEY FASTER AS THERE ARE NOT MANY BUYERS

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