The inability of a business to meet its fixed financial obligations, like payment of interest, is known as _____.

(a) Long-term risk

(b) Market risk

(c) Long-term risk

(d) Business risk

Answer (b) Financial risk

Explanation: Financial risk is the chance of losing cash on investment or a business venture. Other normal and particular financial risks incorporate operational risk, liquidity risk, and credit risk. Changes in macro-economic factors also change the financial risks for firms and industries according to the market environment.

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