Find how boa could have managed the risk

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Companies utilize insurance to transfer some aspects of their risk. Most believe that to manage risk, a business can avoid the risk, assume it, reduce it or transfer the risk to another party.

Not long ago, several banks and other financial institutions collapsed. Bank of America took advantage of the opportunity to purchase several financial institutions including Merrill Lynch. BOA paid approximately $50 billion, or $29 a share, for Merrill Lynch.

Problem 1: Prior to BOA taking over the troubled company, Merrill Lynch paid several million dollars in bonuses to its employees. Bank of America shares dropped 64 cents, or 14 percent after this occurred. How BOA could have managed this risk?

Reference no: EM132727231

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