Advanced Business Vocabulary

1. Using options and futures to reduce risk is called ______.

    hedging

    betting

    gambling

2. To reduce exposure to any single asset, companies use ______.

    centralisation

    isolation

    diversification

3. The risk of a borrower defaulting on their loan is called ______.

    market risk

    liquidity risk

    credit risk

4. When prices in the market fluctuate rapidly, this is known as ______.

    stability

    volatility

    liquidity

5. The ability to convert assets into cash quickly is known as ______.

    liquidity

    profitability

    credit

6. ______ are financial contracts that derive their value from underlying assets.

    Equities

    Debts

    Derivatives

7. Companies must ensure they meet all legal obligations through ______.

    compliance

    volatility

    diversification

8. ______ involves spreading investments across different sectors to reduce risk.

    Consolidation

    Diversification

    Specialisation