Explain popular risk analysis technique is var

Assignment Help Other Management

Reference no: EM132129

QUESTION 1

a) An increasingly popular risk analysis technique is VAR. Explain, illustrate and assess this technique.

b) Discuss what strategies can be used as risk planning tools?

c) Describe the following techniques and state in what part of risk management process they fit in-

Sensitivity Analysis
Risk Maps
Risk Questionnaires

QUESTION 2

a) Describe how the practice of risk management similar and different to hedging?

b) "Risk philosophy and risk appetite must go in hand in hand to ensure that the organisation has strength and vitality." Discuss

c) Clearly explain the following terms:

Currency option,
Future contracts
Operational risk under Basel II
Stress testing

d) The stock of B Ltd, performs relatively well to other stocks during recessionary risks. The stocks of C ltd on the other hand, does well during the growth periods. The stock of B Ltd and C ltd are currently selling for $ 100 per share.

Details	High Growth	Low Growth	Stagnation	Recession
Probability	0.3	0.4	0.2	0.1
Return on B stock	100	110	120	140
Return on C stock	150	130	90	60

Calculate the expected return and risk on investing $ 1000 in the equity of B Ltd and C Ltd. Comment on the results.

Reference no: EM132129

Questions Cloud

Compare and contrast swot analysis with pestle analysis : Compare and contrast SWOT Analysis with PESTLE Analysis. Discuss five barriers to effective change management. Suggest appropriate measures to overcome these barriers

Explain the main risk management concepts : The management of risk approach consists of the risk management policy, process guide, plan and risk register. Explain the main risk management concepts that need to be considered in establishing these documents.

How much will be paid to purchase the contracts : How many call option contracts must be purchased by ABC in order to hedge against the currency risk of the payment of DM 625,000 on the 21st September 2010? How much will be paid to purchase the contracts?

Describe six risk concepts which will apply to the risk : General employees need to be taught to recognize and assess risks in ways that are relatively easy to understand. Describe six risk concepts (that is questions that a risk manager will ask when assessing risk) which will apply to the risk of most t..

Explain popular risk analysis technique is var : An increasingly popular risk analysis technique is VAR. Explain, illustrate and assess this technique. Discuss what strategies can be used as risk planning tools? Explain the following techniques and state in what part of risk management process they..

How utility functions could affect decision making process : One of the executives of Ford has been saying that: "Risk management is a costly technique that has limited benefits." Discuss. Demonstrate how utility functions could affect decision making process regarding risk of Ford

Explaining how securitization operates : Banks find it more profitable to lend money as the margin on lending is much higher than any other banking activity. However, banks have to assess credits risks and take necessary measures to reduce and mitigate their risks. After explaining ho..

Why are incoterms important in international trade : Why are incoterms important in international trade?, Discuss the risks that an exporter faces when dealing on open account, Explain the risk management process and the importance of reporting and communication in this process.

Explain the distinction between prediction and forecasting : Explain the distinction between Prediction and Forecasting?, Why Forecasting is significant in decision making?, Define Delphi technique of Forecasting. What are the various decisions operation managers are called upon to make in the manufacturing ..

User Account

All Pages