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What is ‘Financial Risk?’ Why Does It Arise? - Business Studies

Short Note

What is ‘Financial Risk?’ Why does it arise?

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Solution

Financial risk is a situation when a company is not able to meet its fixed financial charges. The fixed financial charges are the :-

  • Interest that is to be paid on borrowed capital and
  • Rate of dividend to be paid on preference capital.
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APPEARS IN

NCERT Class 12 Business Studies Part 2 - Business Finance and Marketing
Chapter 1 Financial Management
Short Answer | Q 1 | Page 254
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