ESSAY 3 TOPIC OUTLINES Chapter 23. Risk Management Why is it important? Can you relate to
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ESSAY 3 – TOPIC OUTLINES
Chapter 23. Risk Management
- Why is it important? Can you relate to your workplace? Brief summary of risk management.
- Types of risk: FX risk, commodity price risk, interest rate risk, project selection risk, credit risk
- Risk management tools: better matched with the types of risk
- Note: forwards, futures, swaps are great derivate hedging tools, but definition is enough
- Common practice, emerging type of risk, emerging management tools
Chapter 24. Bankruptcy, Reorganization, and Liquidation
- What is financial distress (one type of risk) and its potential consequences, focusing on failures
- Try to think of the consequences as impacts on general public/ economy
- Types of bankruptcy settlements (go briefly, paying more attention to compare and contrast)
- Formal versus informal
- Reorganization – try to find examples
- Liquidation – try to find examples
- Other motivations for bankruptcy – anything strategical? Check American Airlines 2011
- Bankruptcy Law (keep it short) and its limitations (critical thinking)
- Other matters such as: dot.com bubbles, too big to fail, government bailouts
- You could even predict the upcoming bankruptcies/ bailouts from this period
Chapter 25. Portfolio Theory
- What is a portfolio? Who cares about it? How would it be important to you?
- Efficient portfolio theory: explain it in a nutshell as if you had 2’ elevator pitch
- Skipping the technical parts (25-1a, 25-1b, 25-2) – in essay but recommend reading
- Reiterating CAPM in one paragraph to address the concept of risk and return
- Skipping other theories (CML, SML, APT)
- Summarizing the implications for portfolio managers (including individuals)
- I would say rather than focusing on risk versus return (textbook), discuss more real life matters
- Such as the impact of tax on your investment -> how to minimize tax expenses
- Different risky assets in a diversified portfolio such as ETFs or REITs
- What is a relatively optimal asset allocation for someone with particular investment horizon and risk tolerance, and income level
- In short, I do hope you share with others your view on personal investment
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1305637108
6th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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