Financial risk is most associated with_______________.

Equity investments are investments in the shares of a company. These investments are riskier than debt investments, because equity investors are not guaranteed a return on their investment. If a company fails, equity investors may lose all of their investment.

Debt investments are investments in the debt of a company. These investments are less risky than equity investments, because debt investors are guaranteed a return on their investment. If a company fails, debt investors will be paid back before equity investors.

Therefore, financial risk is most associated with the use of equity financing by corporations.