Risk in finance

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…

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…

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…

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…

The first key principle is being able to activate or create an annual budget. The key to great leadership is being a leader that knows what the organization needs to become or stay successful. A non-profit cannot be successful if they are following a budget that does not fit their plans of operation. The best budgets will be in align with a detailed annual plan that is a written narrative that all the staff and board members clearly understand and are able to help the non-profit stick to the…

is the energy sector and in the Oil and Gas Equipment and Services industry. Competitors with Halliburton are kinder Morgan Inc. and Schlumberger. According to Yahoo finance, Schlumberger has a higher stock price and controls more of the market share. Halliburton has 12.82% of the market share. Generally I thought investing in the energy sector during the summer was a decent idea. My thoughts behind it was during the summer, consumers in America utilize more energy whether that was for the home,…

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,…

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…

The Santander Group was founded in 1857 in the city of Santander, in Cantabria, Spain. In 2007, on its 150th anniversary Santander Group had become one of the largest bank in terms of market capitalization and net profit. Santander had achieved rapid growth due to its mergers an acquisition. Santander Consumer Finance (SCF) which was founded in 1987 is a division of Santander Group that focuses on the consumer financial sector. It first started with a partnership and shared ownership of the…

In business “any goal worth achieving involves an element of risk” (Karnazes n.d.) and without risks comes no reward. Previously, several solutions to Precision Chem-Dry’s management problem have been identified, such as implementing professional development for all staff, hiring a small business accountant and investing in growing social capital. All of these solutions have been identified as being beneficial to the organization, but before Precision Chem-Dry can make a choice of whether or…