Case 17: Flirting With Risk

Risk for most people is an accepted part of everyday life e.g. catching a bus or walking to the shop etc... will carry some element of risk. Risk is associated with our health, safety, security, well being, employment, education, daily activities, using resources and equipment and community participation. Some adults such as those who are disabled or who are older are usually discouraged from taking risks with their budgeting, planning, employment and their daily living skills usually because people fear for their limitations or that they might hurt themselves or others. Everyone has the right to take risks and make

Give an example. (5 marks) Briefly discuss whether the short-term differences between applications in (a) are removed when the investment is sold. (3 marks) Briefly suggest reasons why short-term differences may not be irrelevant. (2 marks)

At risk has an unspoken meaning. At risk is synonymous with at-risk-youth in Western Culture. At risk is a phrase used in human services, the media, academia and government to identify young people who are troubling or on the fringe of risky behavior. If you do a Google search of the phrase at risk over 13 million images will appear most of which are of young people. Risk Discourse creates a risk society in response to specific populations being on the fringe of what is deemed “normal” within society. Risk discourse is a popular modernity term written at length by Modernist such as Ulrich Beck and Anthony Giddens European Sociologists. A Risk Society was not even a term until the 1980s. In the 1990s Risk Society became popular and it acceptance coincided with the infiltration of Risk Discourse into sociology, politics, literature and academia. There is an ongoing debate as to whether environmental concerns created a vacuum for a risk society or if it was a by-product of immigration and the War on Drugs. Either way Risk Discourse and risk society language terms are here to stay. Peter Kelly poses a question asking if young people are a society’s most precious resource then what does society need to do to adequately utilize this resource. He separates young people into categories of income, young people are exposed to high-risk setting more frequently than high income youths. Peter Kelly makes this separation to demonstrate there is inadequate research available on young

The strategies which are used by this company are not advantageous in the sense that most of the corporate debts in the organization usually carry considerable amounts of higher yields. Producing above average returns in the organization, with risk set a lower level than the normal risks would be an appropriate strategy which has to be used.

An innocent child is standing in a candy store and looking at all his favorite options from which to choose. He slowly reaches for the bag of M&Ms, and he does not know what all the chemicals in that bag will cause him. The M&Ms have ADHD (Attention Deficit Hyperactivity Disorder) causing carcinogens in them called food dyes. These food additives help the food products stay vibrant and eye catching but America’s youth does not know what the consequences are when you eat these products. Children think they are nice and colorful but they do not know what lies behind the wonderful rainbow of colored M&Ms in that bag. That is why The United States needs to ban food color additives to make our nation healthier. The main points on food dyes are the problems they cause, the counter argument against them and the steps the country can take to solve these problems.

10. What recommendations would you make to Jim Sinegal regarding the actions that Costco management needs to take to sustain the company’s growth and improve its financial performance?

2. What would have been Martin’s return for years 2000, 2001, and 2002 if his portfolio had remained with its initial holdings?

This implies that there is upside potential relative to the current price of $37.5; or that it is an undervalued stock.

2. Considering Mary’s need of assurance, it is possible that Mary would prefer other forms, like bond or preferred share, which have more assurance to repay her investment.

The issue of risk scenario carries immense importance for most of the hospitals that are part of the healthcare setting. However, there is not only one scenario that can affect the hospitals but

Such decisions may affect the company’s profitability today but judging from the fact that high risk means low stock price and vice-versa, high return waits in the future.

6. How would you allocate your wealth between the Treasury bill (risk-free rate) and the

b. Plot the CAL along with a couple of indifference curves for the investor type identified above. c. Use Excel’s solver to maximize the investor’s utility and confirm that you get a 50% allocation in stocks. 3. You can invest in a risky asset with an expected rate of return of 20% per year and a standard deviation of 40% per year or a risk free asset earning 4% per year or a combination of the two. The borrowing rate is 9% per year. a. What is the range of risk aversion for which a client will neither borrow nor lend, that is, for which the allocation to this risky investment is 100%? b. Draw the Capital Allocation Line. Indicate the points corresponding to (i) 50% in the risk-less asset and 50% in the risky asset; and (ii) -50% in the riskless asset and 150% in the risky asset. c. Compute the expected rate of return and standard deviation for (i) and (ii). d. Suppose you have a target risk level of 50% per year. How would you construct a portfolio of the risky and the riskless asset to attain this target level of risk? What is the

Assume that one of Philip’s clients is a married man, aged 36 with two young children, who wishes to reallocate a significant portion of his retirement funds that are currently invested in certificates of deposit. Philip recommends a growth investment, and he identifies the three representative possibilities shown in Table A.

In their research study, Souder & Myles (2010) identify that risk is chiefly fundamental to investing. Böhringer & Löschel (2008) further add that there is no discussion of returns or performance that is deemed meaningful in the absence of at least some mention of the involved risk. However, the trouble for investors, who have just entered into the marketplace, involves the process of figuring where risk really lies, as well as what the difference between the various levels of risks. Relating to the manner, in which risk is fundamental to investments, a significant number of new