Question

What risk might you encounter when borrowing $1 million?

Answer 1

while taking a $1 million loan, the major risk that you are exposed to is interest rate risk (in case of floating interest rate, which is the case in most of the time). Interest rate risk is the risk that arises for borrowers from fluctuating interest rates and it could cause a substantial loss if not hedged properly.

Another risk you might encounter is exchange rate risk if you are dealing in foreign exchange. It also needs to be properly hedged.

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