BUS650 Managerial Finance - Types of Risk Wk4 Assignment

May 22nd, 2016
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BUS650 - Types of Risk Week 4 Assignment

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RUNNING HEAD: THE FOUR MAJOR BUSINESSThe Four Major Business Risks: Property, Market, Employee, and CustomerBUS650Instructor:May 22, 20161Business RisksThe Four Major Business Risks: Property, Market, Employee, and CustomerIn business there are numerous risks that can affect the business over time, thebusiness risk is defined as the occasion when the business' cash flows are insufficient and canno longer maintain the companys operating expenses. These are expenses that a businesswill incur in carrying out its typical day-to-day operations. This will include employeewages, property and machine rental, equipment repairs, taxes, transportation cost,administrative and other general expenses. Companys lacking sufficient cash flow that isneeded to pay for these expenses, is the reason that many businesses have the potential to beunsuccessful. When referring to the likelihood of a company facing a business risk it relatesto the probability of this happening and then is broken down into two types of risk; asystematic risk or an unsystematic risk.As explained in the textbook, Managerial Finance, Nondiversifiable risk is oftenreferred to as market risk. Just so you know all the terms you might run into, diversifiablerisk is also referred to as unsystematic risk, whereas market risk is also called systematicrisk. (Byrd, Hickman, & McPherson, 2013). In relations to a systematic risk it is defined asthe possibility that an entire market or economy w

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