... who are unable to obtain credit from other sources. Naturally, these borrowers tend to default more frequently. Finance company delinquency rates are usually higher than those for banks or thrifts. 7. Event risk: the chance that a totally unexpected event will have a significant effect on the value of the firm or a specific investment. 8. Exchange rate risk: the danger that an unexpected change in the exchange rate between the dollar and the currency in which a project's cash flows are denominated will reduce the market value of that project's cash flow; the risk caused by varying exchange rates between two currencies. 9. Financial Risk: The chance that the firm will be unable to cover its financial obligations. Level is driven by the predictability of the firm's operating cash flows and its fixed- cost financial obligation. 10. Inflation risk: is a risk associated with the macroeconomic situation in a country. ...

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