Which term refers to the risk an investor takes on when investing in a company?

The term that accurately refers to the risk an investor takes on when investing in a company is business risk. This type of risk arises from the specific circumstances and variations in the operations of a company that could affect its ability to generate profits. Factors affecting business risk can include changes in consumer preferences, technological changes, competition in the market, and the overall economic environment.

When investors buy equity in a company, they are directly exposed to the company's performance and potential vulnerabilities. Business risk is inherent in the operations and market presence of the company and directly impacts the returns on investment, making it a critical consideration for investors.

Market risk, while related to the overall market conditions affecting all investments, does not focus specifically on a company's internal operations. Credit risk pertains to the possibility that a borrower may default on a debt obligation, which is more relevant in the context of bond investments rather than equity. Operational risk involves failures or disruptions in the internal processes of a company, which can also affect its performance but is a more narrow aspect of business risk overall.