Fast growth in liquidity usually results in _____ risk
C. no change in
It is the risk of running out of cash or unable to raise additional funds to meet the financial claims from its liability holders to honor the asset purchase agreement.
Answer and Explanation:
Option B, decreased is correct.
In simple terms, liquidity crunch or risk arises when there is a difficulty of converting assets into liquid form. So, if there is fast growth in liquidity, no such cash crunch would occur, which would reduce the probability of risk.
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from Finance 305: Risk ManagementChapter 1 / Lesson 4