Risk in finance

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    Risk financing determines a community bank’s ability to pay for loss events in the most effective and cost efficient manner. Through an enterprise-wide risk management (ERM), the chief executive officer (CEO) operates in collaboration with risk managers or senior executives from other departments to manage all risks. This provides a holistic or team approach. For a community bank, a description of the firm, the top five financial risks, and treatment of the risks will be discussed. Description of firm The community bank services the local town, providing traditional banking services to families, small businesses, and family farms. The bank is small in size, 30 employees with one building located in downtown. Key functions of the community…

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    Adding the risk-free government securities would result in a lower beta for the new portfolio. The new portfolio beta will be a weighted average of the individual security betas in the portfolio; the presence of the risk-free securities would lower that weighted average. q. The comment is not correct. Although the respective standard deviations and expected returns for the two securities under consideration are equal, the covariances between each security and the original portfolio…

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    investment, it is important to analyze risk and diversify securities, to maximize a portfolio to match the goals of the investor. Through analyzing the different classes of risk, one can match investments to an investors risk tolerance and return requirements. While some investments may present greater risk they are countered by a higher rate of return and vice versa, less risk corresponds to a lower return. Moreover, investment risk can be substantially reduced through diversification, which…

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    All these three strategies are different because of their various trade-offs between risk and profitability and their proportion of application of long term fund and short term fund to finance the working capital. First, we’ll look at these approaches individually and then only compare them. Maturity Matching Approach This strategy of financing the working capital is with moderate risk and moderate profitability. In the maturity matching approach, each of the assets would be financed by a debt…

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    Warschauer (2002) also suggests that financial planning has emerged as a significant and possible essential consumer need despite not having a theoretical base for a substantial portion of the decisions suggested by financial planners. Cull (2009) posits that the lack of theoretical development poses a risk to the recognition of financial planning as a profession but a stand-alone theory would enhance the stature of the profession and assist the public in understanding why financial planning is…

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    In summary, based on personal business project’s features, it can be seen that equity financing is a better channels to raise funds than bank loans. Business owners and investors share the benefit and risk simultaneously. For small business, who may not meet bank loan’s qualification, equity financing is not only convenient, but also quite practical. It has strong possibility of operation. This is one of the most important advantages. Therefore, equity financing is suitable way for my personal…

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    FINANCIAL INSTRUMENTS Financial instruments are assets or packages of capital that can be exchanged, such as cash, a contractual right to deliver or receive a financial instrument or evidence of one’s ownership of a company. It is a vital part of every business and the most of the financial instruments provide an effective flow and transfer of capital all over the world’s investors. Nonetheless, to manage a company seldom entails a long or short-term financing. For example, when an invoice is…

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    We are living in an era where international trade is at it's peak and global markets and stock exchanges are key to almost everything that is happening in the whole world. To have a strong understanding of international banking, finance and risk management is crucial to be successful in any corporation. What I want to achieve is to be able to tackle any issue which falls under the umbrella of those three subjects. With my skills that I have learned through detailed studying of mathematics,…

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    analysis) for 2015 such as balance sheets, income statements, and statement of cash flows in an attempt to forecast future growth/decline and gauge risk levels (Subramanyam, 2014). Lastly, valuations and assumptions derived from each assessment listed above are provided in an effort to accurately compare each company and their economic outlook. Analysis Overview As the sporting goods retailing industry continues to evolve and become more competitive, companies such as Dick’s Sporting Goods and…

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    Edwards, John J. Hampton, Wood and Sangster have shown the role of accounting and finance in controlling resources of a business, where business will account for what it owns and owes. That is goods purchased and expanses prepaid or accruals. In addition to this financial decisions will be made such as: the impact on current assets in deciding the creditor limit and current liabilities when deciding on payments of debts. Also Michael Jones portrays the effect of costing in planning for…

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