Individuals, financial advisors, and companies can all developrisk managementstrategies to help manage risks associated with their investments and business activities. Academically, there are several theories,
Standard deviation provides a measure of the volatility of asset prices in comparison to their historical averages in a given time frame. Overall, it is possible and prudent to manage investment risks by understanding the basics of risk and how it is measured. Learning the risks that can appl...
Liquidity ratios, such as thecurrent ratioandquick ratio, can be used as an indicator of a company’s funding liquidity risk. The current ratio, the most common ratio used to measure such a risk, is shown below: Where: Current Assetsare assets that are expected to be converted into cash ...
In the dynamic world of banking, managing risk is a crucial task that directly impacts the stability, profitability, and reputation of financial institutions. Whether it’s credit risk, market risk, operational risk, or regulatory risk, banks need to have a comprehensive understanding of the potent...
So while we use US large-cap stocks as the basis for defining bear markets, this is only for clarity, not because we’re suggesting that investors should measure their performance against an all-equity benchmark like the S&P 500. With this definition in mind, let’s look at historical ...
It will also be imperative for banks to measure and manage operational deposits. All of this will best be achieved under a holistic governance framework that balances delta NII and EVE through six key priorities:Data integrity: ensuring completeness of data, exhaustive and correct data attr...
To analyze trading volumes, one looks at the total amount of shares or contracts traded in a certain time. This shows the level of interest from participants. Turnover ratios measure how often securities are bought and sold in a given period. Let’s look at an example. Here is a table ...
If you didn't have the appropriate risk exposure, you were really sweating bullets, especially you were looking to retire in 2020. Luckily, the bull market resumed soon after the big correction. Let me share a quantifiable way to measure how much equity exposure you should have based on your...
3. Access to Revolving Credit Facilities:Establishing access to revolving credit facilities, such as lines of credit or business credit cards, provides a safety net for managing short-term liquidity needs. This proactive measure can serve as a valuable resource during financial exigencies, offering ...
Liquidity and Treasury Risk Measurement and Management 15% Risk Management and Investment Management 15% Current Issues in Financial Markets 10% FRM Part Difficulty: Which FRM Exam is the Hardest? According to historical and recent pass rates of the FRM exam, Part I is the hardest FRM exam. Co...