Chapter 14

Managing the Risky Business of Corporate Finances

In This Chapter

arrow Looking at interest rate risk and inflation

arrow Mitigating market risk

arrow Considering credit risk

arrow Factoring in foreign exchange risk

arrow Examining off-balance-sheet, operating, and liquidity risks

Business finance is filled with risk. Okay, so maybe it’s not the same kind of risk that you’d face as a soldier or police officer (although any witness to the trading floors of a major stock exchange may argue that Wall Street can quite resemble a war zone), but no one laughs when his job is at risk because someone messed up managing the risks associated with corporate finances. This chapter discusses some of the more common forms of risk encountered in corporate finance.

Understanding that Risk Is Unavoidable

You may think that when it comes to managing corporate finances, you should avoid risk at all cost (pun intended!). The reality is quite the contrary, though: Risk is an inherent, and therefore unavoidable, part of ...

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