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    Risk Measurement Tool

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    comment on the first risk measurement tool you would use and why for any two of the following:

    * Short term liquidity risk * Long term solvency risk * Credit risk * Bankruptcy risk.

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    Solution attached.

    Risk management
    Comment on the first risk measurement tool you would use and why for any two of the following:
    * Short term liquidity risk * Long term solvency risk * Credit risk * Bankruptcy risk.

    1) Short-term liquidity risk
    The first risk measurement tool that I would use to measure the short-term liquidity risk is the current ratio. Current ratio is calculated by dividing the current liabilities from current assets.
    Current ratio = Current assets / Current liabilities.
    Current assets are those assets that can be quickly converted into cash or can be utilized within a period of one ...

    Solution Summary

    This solution of 414 words discusses and analyzes the measurement tools of short-term liquidity risk and long-term solvency risk. It includes definitions, explanations, example and calculations of each tool.

    $2.19

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