Financial risk: Difference between revisions
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imported>Doug Williamson (Historic date deleted.) |
imported>Doug Williamson (Add links.) |
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1. | 1. ''Capital asset pricing model.'' | ||
In the Capital asset pricing model, financial risk means the component of total risk resulting from a firm’s capital structure. | |||
The more net debt there is in the capital structure, the greater the financial risk. | The more net debt there is in the capital structure, the greater the financial risk. | ||
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2. | 2. | ||
The term is also used more generally to mean the wider risk of uncertain financial outcomes. | The term 'financial risk' is also used more generally to mean the wider risk of uncertain financial outcomes. | ||
For example the risks arising from not knowing the home currency value of a foreign currency receipt in the future, or the uncertainty regarding the size of future interest payments on floating rate borrowings. | For example the risks arising from not knowing the home currency value of a foreign currency receipt in the future, or the uncertainty regarding the size of future interest payments on floating rate borrowings. | ||
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* [[Capital asset pricing model]] | * [[Capital asset pricing model]] | ||
* [[Equity risk]] | * [[Equity risk]] | ||
* [[Financial asset]] | |||
* [[Financial liability]] | |||
* [[Financial market price risk]] | * [[Financial market price risk]] | ||
* [[Financial risk management]] | |||
* [[Guide to risk management]] | |||
* [[Operational risk]] | * [[Operational risk]] | ||
* [[Return]] | |||
* [[Risk]] | |||
* [[Risk taxonomy]] | * [[Risk taxonomy]] | ||
* [[Ungeared beta]] | * [[Ungeared beta]] | ||
Revision as of 13:06, 4 August 2019
1. Capital asset pricing model.
In the Capital asset pricing model, financial risk means the component of total risk resulting from a firm’s capital structure.
The more net debt there is in the capital structure, the greater the financial risk.
2.
The term 'financial risk' is also used more generally to mean the wider risk of uncertain financial outcomes.
For example the risks arising from not knowing the home currency value of a foreign currency receipt in the future, or the uncertainty regarding the size of future interest payments on floating rate borrowings.
See also
- Asset beta
- Business risk
- Capital asset pricing model
- Equity risk
- Financial asset
- Financial liability
- Financial market price risk
- Financial risk management
- Guide to risk management
- Operational risk
- Return
- Risk
- Risk taxonomy
- Ungeared beta
Other links
Masterclass: Measuring financial risk, Will Spinney, The Treasurer
