FIN 415 Week 3

Individual Risk Management Problem, Set I

Resource: Foundations of Finance

Prepare written responses to the following assignments from the text:

Ch. 6: Problem 6-1

Ch. 10: Problem 10-15

Learning Team Risk Measurement Summary

Resource: Foundations of Finance

Prepare responses to the following questions in Foundations of Finance.

Questions 6-10 a, 6-10 b, 6-10 c (Ch. 6)

Prepare a 350- to 700-word summary in which you compare and contrast conclusions by utilizing expected return, standard deviation, and the capital asset pricing model.

Make a recommendation to management about which technique is most appropriate from a risk measurement standpoint.

Support your recommendations with calculations from the problems in Foundations of Finance.

Learning Team Problems 6-10A, 6-10B, 6-10C,

Discussion Questions

What is a forward contract? How is a forward contract used to manage risk? Under what circumstances is this instrument most appropriately used?

What is a derivative? How are derivatives used in risk management? What are some of the challenges used in mitigating risk with derivatives?

What is an audit committee? What is the function of an audit committee? How does an audit committee w/in your organization go about insuring compliance with SEC (Securities Exchange Commission) regulations?