Subject: Investment analysis and portfolio management If a company is facing a lawsuit prior to a court verdict the outcome is uncertain so the investment in the company is risky. What kind of risk is...

Investment Analysis and Portfolio Management
If a company is facing a lawsuit prior to court verdict the outcome is uncertain so the investment in the company is risky. Such risk is called contingent liability. A contingent liability is a type of financial obligation or event which might or might not occur in future for the organization. As per US GAAP, contingent liability is a potential expenditure of the company in the future which might happen due to a triggering event to convert it into an actual loss. There are three types of contingent...