Question

Which of the following statements best defines Financial Risk Management?

a.

The process of evaluating and managing current financial risks for a firm

b.

The process of stabilizing a firm's balance sheet position

c.

Identifying and analyzing future financial risks for a firm

d.

Managing financial risks using derivatives for speculative purposes

Answer: (c).Identifying and analyzing future financial risks for a firm Explanation:Financial Risk Management involves identifying, analyzing, evaluating, and managing current and possible future financial risks for a firm with the objective of reducing exposure to future financial risks.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. Which of the following statements best defines Financial Risk Management?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the basic reason for the emergence of a well-functioning derivative market in India?

Q. What has been the growth trend of derivatives market in India since June 2000?

Q. How is the repricing of futures contracts different from forward contracts?

Q. What is the key difference between Futures and Forwards regarding fulfillment of the contract on the delivery date?

Q. What is the strike price in an options contract?

Q. What is the main difference between a Call Option and a Put Option?

Q. What is the classification of options based on the maturity date?

Q. What is the main characteristic of options contracts regarding the buyer's obligation?

Q. What is the prime motive for futures contracts?

Q. In what form are Stock Index futures traded?

Q. What are examples of commodity futures?

Q. What is the essential characteristic of futures contracts regarding their terms?

Q. What is "Marking to Market" in the context of futures contracts?

Q. How does a futures contract differ from a forward contract?

Q. How does a buyer of a futures contract differ from a seller of a futures contract?

Q. What is the primary characteristic of a futures contract?

Q. What is the risk associated with counterparties in forward contracts due to the absence of secondary markets?

Q. What is a notable characteristic of the size and variety of forward contracts compared to other derivatives like Futures?

Q. How are forward contracts generally settled?

Q. What is a characteristic feature of forward contracts in terms of customization?

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!