StudentShare solutions
Triangle menu

Financial Risk Management - Essay Example

Not dowloaded yet

Extract of sample
Financial Risk Management

At the business level, managers use VaR as a standard summery of market risk exposure. A benefit of the VaR which is a, the great value theory, is that it may be computed without full information of the return allocation. Semi or fully non-parametric estimation processes are obtainable for downside risk estimation. Additionally, at an adequately low confidence level the VaR calculate explicitly concentrates regulators and risk manager’s attention on uncommon losses, than on potential catastrophic great losses. The general use of VaR based risk management is that, it has become increasingly significant in the study of the belongings the option market, and the stock market of these constraints. For instance, organizations with a VaR constraint may be willing to purchase out of the money put choices on the market portfolio so as to limit their downside risk. If multiple organizations follow the similar risk management plan, then this will clearly lift the equilibrium costs of these options. In addition the form of the returns of stock distribution in equilibrium will be influenced by the management efforts of collective risk. As an outcome, it is possible that the allocation of stock returns will become more heavy-tailed. ...Show more

Summary

Financial Risk Management
1. Introduction:
Many financial and non-financial organizations currently report the significance of value-at-risk (VaR), a risk that calculates for possible losses…
Author : considinedoming
Financial Risk Management essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Financial Risk Management"
with a personal 20% discount.
Grab the best paper

Related Essays

Financial Risk Management
It was in the year 2008, during the global recession; J. P. Morgan Chase acquired Bear Stearns. Bear Stearns was ranked fifth amongst all American investment banks at the time of its downfall (Source Watch, n.d.). Improper financial risk management was the centre of the reason for its downfall.
4 pages (1000 words) Essay
Corporate Financial Risk Management
This report is aimed at demonstrating how futures contracts can be used as a hedging strategy that would also isolate profitable opportunity for the firm. This been achieved by taking a long position on futures contracts, and the hedging strategy turn out to be profitable for the firm.
3 pages (750 words) Essay
Financial Risk Management
Among such products financial derivatives are products that are extensively used (Bodnar, Graham, Harvey, & Marston, 2011). Derivatives, as the name implies, are financial products the value of which is derived from the other financial security. In addition to security based valuation, derivatives can also be developed based on the values derived from the any particular rate as well as index such as Interest Rate Swap etc (Cowell, 2006).
4 pages (1000 words) Essay
Financial Risk Management
The investors need to have diversified portfolio for reducing the performance risk. In a similar manner, it is essential for the financial institutions to implement effective risk management procedures and techniques for mitigating the financial risks. It is very important to reduce the credit risks and interest rate risks which can have negative impact on the performance of the financial institutions.
10 pages (2500 words) Essay
Financial Management (Currency Risk Management)

The author states that exchange rate appears in the financial section of newspaper each day. The number of US dollar required purchasing one unit of foreign currency, this is call direct quotation. Direct quotation has a dollar sign in their quotation. The number of foreign currency that can be purchase for one dollar are called indirect quotation.

11 pages (2750 words) Essay
Integrated risk management (financial risk management)
A very good example is of Honeywell Inc. Honeywell has used an overall annual aggregate retention to manage its risks rather than using separate retentions for each risk. This does not only reduce premiums paid to
7 pages (1750 words) Essay
Strategic financial management risk assessment decisions

The paper highlights certain troubles caused by the variation in perceptions of risk by different corporate houses. The importance of risk assessment is evaluated through a qualitative research, by putting forward some risk theories. Quantitative approach is also undertaken as the risks are quantified.

6 pages (1500 words) Essay
Financial risk management
financial crisis/ distress as ‘an event in which substantial losses at financial institutions and/or the failure of these institutions cause, or threaten to cause, serious dislocations to the real economy, measured in terms of output foregone.’ Financial malpractices at
1 pages (250 words) Essay
JP Morgans Financial Risk Management
The procedures and practices of the risk management model adopted by the bank were inadequate in providing enough control over various price and market risk models it adopted, especially within the chief investment office; The oversight and governance
1 pages (250 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT