Risk Measures

Note : I am going to add my Corporate Strategy Assigment when i was at the university about Financial Investment Methods. Enjoy it :)

PART -18

10    RISK MEASURES

Expected value

Value is caculated by using Market interest rates on the value of the investment return of an investment over the period provided by or their interest rate is discounted by as a result of the reduction.

It is different that a certain promise of money or a commodity to be derived later and today have been acquired. Because this is a kind of financial model, which say the money will lose value in intermediate-term.

The most widely used method of evaluation of investment projects during the net present value method.

As a sample, we can explain the expected value with the calculation as below. The expected value is 2.0 in this project.

Cost of uncertainty

Another important element of time inherent in the monetary matters of uncertainty, namely risk. Because there is always the possibility not to pay the borrower's debt and extending the maturity of the danger increases in line with this case.

The risk grows if time period grows and if the risk grows, the time value of money will grow.

Expected loss ratio

This formula includes the absolute value of the loss divided which is expected. The total expected gain and absolute value that loss expected help to use this formula.

Coefficient of variation

Conditions of limited liability

Take Risk Into Account In Projects

*Note : I am going to add my Corporate Strategy Assigment when i was at the university about Financial Investment Methods. Enjoy it :)

PART -16

8      TAKE RISK INTO ACCOUNT IN PROJECTS

While the investors try to decide project appraisals, they consider the inputs values and discounted rate to accept or else refuse the projects. However, the most important point is to think NPV if positive or negative, correspondingly.

After then, investors have to find the highest NPV to decide the best option, if NPV is positive.

Nevertheless, there is always a risk at the application. For this reason, they have to consider the criteria of investment by distributing NPV respectively.

There are two main topics to check while doing risk analysis. First, combination of NPV. Second, selecting the discount rate then, use the criteria.