Market Risk Control in Investment Decisions

2018 ◽  
pp. 35-57
Author(s):  
Chunhui Xu ◽  
Takayuki Shiina
Keyword(s):  
Risk Control ◽  
Investment Decisions ◽  
Market Risk

scholarly journals Relationship Between Risk Management Practices and Investment Decisions in Bank of Kigali, Rwanda

2020 ◽  
Vol 1 (1) ◽  
pp. 88-107
Author(s):  
Gedion Alang’o Omwono ◽  
Kayumba Annette
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Best Practice ◽  
Management Practices ◽  
Investment Decisions ◽  
Liquidity Risk ◽  
Market Risk ◽  
Risk Tolerance ◽  
Credit Risk Management ◽  
Risk Monitoring

The purpose of this study was to examine the relationship between risk management practices and investment decisions in Bank of Kigali, Rwanda. This study adopted correlational research design. Descriptive statistics include those of the mean, standard deviation and frequency distribution while inferential statistics involves use of spearman’s coefficient correlations. Linear regression was used where ANOVA was carried on each variable. The study found that there was a correlation between liquidity risk management, default risk management and market risk management with performance of the Banks. The study findings indicated that credit risk management (r=0.096, p<0.01), liquidity risk management (r=0.347, p<0.01), market risk management (r=0.506, p<0.01) and operational risk management (r=0.612, p<0.01) on financial performance. It however found that the Banks do not involve experts and consultants in market risk management thus recommendations were made for the Banks to revise their credit risk management policies, open up and share information with other players on market risk thus involve consultants more in their market risk management and to be more proactive than reactive in risk management. The study concluded that, risk management has a positive influence on the investment decisions and that risk monitoring can be used to make sure that risk management practices are in line with proper best practice risk monitoring policies which also helps bank management to discover exposures at early stages and make corrective actions. The study recommended that, Senior management should develop strategies, policies and practices to manage risk in accordance with the Banks risk tolerance and to ensure that the bank maintains sufficient liquidity risk cover.

Market Risk Analysis to Hydropower Project Based on Monte Carlo Method - Case Study of Xiluodu Hydropower Station in Sichuan Province

2012 ◽  
Vol 472-475 ◽  
pp. 1437-1440
Author(s):  
Zi Yi Li ◽  
Song Jiang Wang
Keyword(s):  
Monte Carlo ◽  
Monte Carlo Method ◽  
Risk Analysis ◽  
Investment Decisions ◽  
Price Volatility ◽  
Market Risk ◽  
Hydropower Station ◽  
Hydropower Project ◽  
Project Investment

Hydropower project investment decisions facing the market risk mainly for electricity price volatility. In this thesis, we are using Monte Carlo method analyzes market risk of XiLuoDu hydropower project. Result shows the practicability and effectiveness of Monte Carlo method.

Agricultural Products Supply Chain Model Based on a Market Risk Control Perspective

2014 ◽  
Vol 687-691 ◽  
pp. 4972-4978
Author(s):  
Xin Peng ◽  
Gang Chen
Keyword(s):  
Supply Chain ◽  
Risk Control ◽  
Market Risk ◽  
Agricultural Products ◽  
Control Mode ◽  
Agricultural Product ◽  
Chain Model ◽  
Production Chain ◽  
The Status ◽  
Low Efficiency

In this paper, the status of the farmers’ decentralized supply chain production mode were analyzed and the current causes of low efficiency in the agricultural supply chain is presented from the perspective of market risk control mode of agricultural product supply chain. Innovation in the integration of agricultural production chain and supply chain management of agricultural products based on the characteristics of the circulation of agricultural products as well as the balance of relationship between production and demand.

scholarly journals Firm Size, Market Risk, and Stock Return: Evidence from Indonesian Blue Chip Companies

2019 ◽  
Vol 6 (2) ◽  
pp. 171-182
Author(s):  
Meutia Handayani ◽  
Talbani Farlian ◽  
Ardian Ardian
Keyword(s):  
Panel Data ◽  
Firm Size ◽  
Stock Return ◽  
Investment Decisions ◽  
Market Risk ◽  
Financial Reports ◽  
Common Effect ◽  
Effect Model ◽  
The Common ◽  
Blue Chip

This study examines the influence of firm size and market risk on the stock return of Indonesian high reliable companies. The samples are companies listed on the LQ45 between 2015 and 2017. There are 45 companies have been selected or 196 observations. The data was obtained from the financial reports and analysed by using regression for panel data method, namely the common effect model and the Chow test. The results demonstrate that  firm size has an effect on the stocks return, while market risk does not have effect on the stocks return of the blue chip companies. The results of this study are expected to help investors in making proper investment decisions toward bluechip Indonesian companies.

Project Risk Definition and Measurement in a Not-for-Profit Setting

1992 ◽  
Vol 5 (3) ◽  
pp. 216-224
Author(s):  
Louis C. Gapenski
Keyword(s):  
Capital Investment ◽  
Investment Decisions ◽  
Market Risk ◽  
Shareholder Wealth ◽  
Wealth Maximization ◽  
For Profit ◽  
Not For Profit ◽  
Risk Definition ◽  
Shareholder Wealth Maximization ◽  
The Difference

The health care finance literature on capital investment decisions generally applies conventional market risk concepts without distinguishing between proprietary and not-for-profit forms of organization. Since proprietary firms have shareholder wealth maximization as their primary goal, a project's relevant risk is its contribution to the riskiness of the equity investors' well diversified stock portfolios, or its market risk. However, not-for-profit organizations do not have shareholder wealth maximization as their primary goal, and thus market risk concepts are not applicable. Rather, the relevant risk in a not-for-profit setting is a project's corporate risk; that is, the project's contribution to the riskiness of the organization. The difference in risk definition and measurement between proprietary and not-for-profit firms has two implications for managerial decisions: (1) in making capital investment decisions, a manager must define and measure a project's riskiness on the basis of the firm's organizational form; and (2) although diversification for the sole purpose of risk reduction is not a valid rationale for proprietary firms because stockholders can achieve the same result at less cost, risk-reducing diversification does make sense for not-for-profit firms.

“Cost of Capital” in Residual Income for Performance Evaluation

2002 ◽  
Vol 77 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Peter O. Christensen ◽  
Gerald A. Feltham ◽  
Martin G. H. Wu
Keyword(s):  
Risk Premium ◽  
Investment Decision ◽  
Investment Decisions ◽  
Market Risk ◽  
Residual Income ◽  
Risk Averse ◽  
Additional Risk ◽  
Market Risk Premium ◽  
Specific Risk ◽  
Capital Charge

We consider a setting in which a firm uses residual income to motivate a manager's investment decision. Textbooks often recommend adjusting the residual income capital charge for market risk, but not for firmspecific risk. We demonstrate two basic flaws in this recommendation. First, the capital charge should not be adjusted for market risk. Charging a market risk premium results in “double” counting because a risk-averse manager will personally consider this risk. Second, while investors can avoid firm-specific risk through diversification, a manager cannot. If the manager faces significant firm-specific risk at the time he makes his investment decision, then it is optimal to charge him less than the riskless return so as to partially offset his reluctance to undertake risky investments. On the other hand, the manager will vary his investment decisions with the pre-decision information he receives, which accentuates his compensation risk, and the firm must compensate him for bearing this additional risk. Hence, if the manager will receive relatively precise pre-decision information, then it is optimal to charge him more than the riskless return to reduce the variability of his investment decisions.

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