Introduction of the term Risk factor

Question

Give a brief introduction of the term Risk factor?

Answer 1

Company increasing the capital by borrowed capital, as it admits the risk in two ways :

i) Company maintains the payment of interest as well as installments of borrowed capital at predecided rate and time without being concerned about the profits and losses.

ii) Borrowed capital is safe capital in the case where the company unsuccessful to meet the contract done with the lenders of the money.