For each of the following, indicate which type of investment risk is being described.

a. WheatWortd is a company that distributes whole-gram 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.

b. A restaurant chain recently issued worth of new stock shares, increasing it's debt obligations in hopes of financing a new restaurant location. The construction of the new store ended up taking twice as long as anticipated, thus forestalling the expected increases in revenue. AS a result, the company is having difficulty making the interest payments on its outstanding debt.

c. 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.

Question

20-05-2021
Business

contestada

For each of the following, indicate which type of investment risk is being described.

a. WheatWortd is a company that distributes whole-gram 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.

b. A restaurant chain recently issued worth of new stock shares, increasing it's debt obligations in hopes of financing a new restaurant location. The construction of the new store ended up taking twice as long as anticipated, thus forestalling the expected increases in revenue. AS a result, the company is having difficulty making the interest payments on its outstanding debt.

c. 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.

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Munali Munali · Answer 1 · 2021-05-24T10:28:09+02:00

Answer:

a. The ne research may go against the whole gram cereals and people will consume it less therefore demand may be lowered causing the sales and profit to decrease.

b. The increase level of gearing makes the company risky and people do not prefer to invest in the company which have high gearing. The increase debt and interest burden may cause company to become bankrupt and there can be threat for solvency.

c. The bargaining power of buyer is high in such case where the seller finds it difficult to find a suitable buyer.

Explanation:

Investment risk is the risk associated with the business or new investment project. There should be detailed analysis of risk and return before investing in any project. It is better to understand the nature of risk and the extent to which it can hinder the progress of the business.