Indicate which of the following types of risk is represented by the statements below:

(ERM Appendix 1.1)

Types of Risk:

Market Risk (M)

Credit Risk (C)

Liquidity Risk (L)

Operational Risk (O)

Legal and Regulatory Risk (LR)

Business/Strategic Risk (B)

Strategic Risk (S)

Reputation Risk (R)

1. ________ A firm may not be able to raise the necessary cash to roll over its debt.

2. ________ A trader takes excessively large positions and supervisors do not detect this due to faulty controls.

3. ________ An investor buys shares in a company because he/she expects the value of the shares to increase but the price of the shares falls.

4. ________ A manufacturing firm introduces a promising new product. However, not many consumers want to buy the product.

5. ________ A firm is found to be contributing insufficient funds to its employees' pension plan. As a result, workers picket the firm, customers refuse to buy its products, and the government begins an investigation.

6. ________ An investment firm buys $10,000,000 of the bonds of a corporation. However, after two years the issuer of the bonds defaults on the bond, failing to pay interest or principal.

7. ________ A firm judges that a newly identified market segment 60-year old gamers will not be a strong market, so it does not target that segment in its marketing. Its competitors target that segment which turns out to be highly lucrative for them.