Professional Documents
Culture Documents
Trade Cycle
Risk Management
The process of identification, analysis and either acceptance or
mitigation of uncertainty in investment decision-making. Essentially, risk
management occurs anytime an investor or fund manager analyses and
attempts to quantify the potential for losses in an investment and then
takes the appropriate action (or inaction) given their investment
objectives and risk tolerance. Inadequate risk management can result in
severe consequences for companies as well as individuals. For example,
the recession that began in 2008 was largely caused by the loose credit
risk management of financial firms.
Corporate Action
A corporate action is an event initiated by a public company that
affects the securities (equity or debt) issued by the company. Some
corporate actions such as a dividend (for equity securities) or coupon
payment (for debt securities) may have a direct financial impact on the
shareholders or bondholders; another example is a call (early redemption)
of a debt security. Other corporate actions such as stock split may have an
indirect impact, as the increased liquidity of shares may cause the price of
the stock to decrease. Some corporate actions such as name change have
no direct financial impact on the shareholders. Corporate actions are
typically agreed upon by a company's board of directors and authorized
by the shareholders. Some examples are stock splits, dividends, mergers
and acquisitions, rights issues and spin offs.
Portfolio Management
Portfolio management is the art and science of making decisions about
investment mix and policy, matching investments to objectives, asset
allocation for individuals and institutions, and balancing risk against
performance.
Portfolio management is all about strengths, weaknesses, opportunities
and threats in the choice of debt vs. equity, domestic vs. international,
growth vs. safety, and many other trade-offs encountered in the attempt
to maximize return at a given appetite for risk.
Working Capital
Working
capital (abbreviated WC)
is
a
financial
metric
which
represents operating liquidity available to a business, organization or
other entity, including governmental entity. Along with fixed assets such
as plant and equipment, working capital is considered a part of operating
capital. Gross working capital equals to current assets. Working capital is
calculated as current assets minus current liabilities.[1] If current assets are
less than current liabilities, an entity has a working capital deficiency, also
called a working capital deficit.