Questions on Market Risk

The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).

Rate = Canadian rate Mexican pesos? Japanese Yen ? French Francs ?

increasing w by a small amount. Therefore, Marginal VAR (value at risk) allows risk managers to study the effects of adding or subtracting positions from an investment portfolio. Since value at risk is affected by the correlation of investment positions, it is not enough to consider an individual investment's VAR level in isolation. Rather, it must be compared with the total portfolio to determine what

Speculative risk exists when there is uncertainty about an event that can produce either a profit or a loss.

Identify the potential risks which affect the company and manage these risks within its risk appetite;

Exchange rates play a pivotal role in the relationships between individual economies and the global economy. Almost all financial flows are processed through the exchange rate, as a result the movements and fluctuations of the exchange have a significant impact on international competitiveness, trade flows, investment decisions and many other factors within the economy. Due to the increasing globalisation of the world economy, trade and financial flows are becoming more accessible

trading business in dollars; this is the balance that you should be looking to keep

Overall Exchange Rates change every day and depending on how it changes can affect inbound and domestic tourism.

Evaluate the level of risk in the research that was conducted (minimal versus more than minimal).

Every day of our daily lives we are exposed to a large variety of risks. Those risks can include large financial losses that may occur from investing in the stock market, to damage to your vehicle while driving to work, or fire damaged to your property while on vacation. All those unforeseen events can have the ability to drain all your financial resources, which can cause some major damage to your financial goals and stability. Personal risk management is important because it helps reduce and sometimes eliminate those potential risks. By managing and assessing risks we can alleviate potential financial losses and ensures that our way of life can remain unaffected by those unforeseen events. (Personal Risk Management, 2016). Together there are five risk management steps that are combined to deliver a simple and effective risk management process. Those steps include identifying the risk, analyzing the risk, evaluating and ranking, treating the risk and finally monitoring and reviewing the risk while implementing changes as needed (Schurr, 2016)

We want our Risk functions not only to ensure compliance with existing rules but also review the entire operation of the company through a broad, principle-based lens. CariJam generally believes that the risk function will play a vital role in collaborating with other functions to reduce risk. We hope that the risk function’s tasks will ensure that compliance considerations are always top of mind and not addressed perfunctorily by businesses after they have formulated their strategies or designed a new product.

The main exchange rates exposures are: British pounds, Deutsch Mark, Japanese Yen and Belgian Francs.

International Financial Management Trial Exam Closed Book Examination INCLUDEPICTURE uvafileserverjligter1DataOnderwijsInternational Financeif2008sbriederLocal SettingsTempRarDI04.890ABS-logo.gif MERGEFORMAT Closed Book Examination Answer as brief and concise as possible redundant or superfluous remarks may lead to a lower score. The maximum score per problem is given between parentheses. The maximum score of the whole exam is 100 points. QUESTION 1 - 20 points SHAPE MERGEFORMAT This graph depicts the REAL value of the broad index which is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. a) Consider the following table of price levels,

Concept of risk, risk assessment, risk management and how uncertainty affects the process will be discussed.

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