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    Question

    The Herfindahl-Hirschman Index (HHI) is predominantly

    used by financial regulators and analysts to evaluate which of the following specific market conditions or types of risks within an industry?
    A Interest Rate Risk Correct Answer Incorrect Answer
    B Operational Risk Correct Answer Incorrect Answer
    C Liquidity Risk Correct Answer Incorrect Answer
    D Market Concentration Risk Correct Answer Incorrect Answer
    E Credit Default Risk Correct Answer Incorrect Answer

    Solution

    HHI measures market concentration by squaring and summing the market shares of firms. A high HHI reflects less competition and possible monopolistic risks.

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