Question

How is risk analysis for investment opportunities at a small firm different from the type of risks analysis likely to be used by large,firms

Answer 1

Risk analyses fore Smale ftoms Resk analyses by - large froms * A Market & SK s More in smale firms due to Short-term ennestment in Money Market instruments leke ? Ta beles, certificate of depose't etc. Market resk is less th largere organesatibos. Because mostly inwest- Ment is in capital Market for longer terom uke: bond, debentores. creedit risk will be on higher Se'de and obligators related debt needs to be repay with in short beriod of time. Creede't resk e's comparative aly less in large Firms. Here dent obligations are needs to be paid in long perseo di AS Money Market P'S more rolatile, hence inflation res K prevails More in small business. Due to fixed beredd of investment, market volatility has less empaet and inflation mesk gets reduced 5 Profét earnings are Moderate for longere period of time in the investment process. Short-term profit Margan is more in small firms due to more resk factores and Speculation : Thus, these are the resk analyses for important differences between small firms and large froms. All the best for your exam!