Module 43: Financial Risk Management and Capital Budgeting

Overview

This module describes the relationship between risk and return and the use of various techniques to manage financial risk. There is an inverse relationship between risk and return. Companies attempt to maximize return within the risk tolerance level of its owners. There are a number of ways in which management attempts to mitigate risk including diversification and hedging.

This module also covers the concepts of the time value of money. Understanding the topic of the time value of money is essential for successful completion of the BEC exam. You must understand the mechanics as well as the concepts. Specifically, you should understand how present value techniques are used to value financial assets ...

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