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| Questão | Responda |
| Risk | When the frequency of risky events can be calculated |
| Uncertainty | Implies an inability to predict |
| Why do firms willingly take risks? | So that they can make profits. |
| What is risk? | Risk exists where there are uncertainty and one or more possible outcomes affects the business. It can be an opportunity or a threat. |
| What is Risk Appetite? | Corporates accept risk associated with their core competences. ( they do not hedge against these risks). Therefore, there is highest risk appetites where people feel more in control. |
| Capital structure and investor risk appetite. | Investors provide either equity or debt. Equity: riskier for the investor, but with higher return. Debt: less risky fir the investor, but offers a lower return. Debt holders want low risk: interest is maximum reward> |
| Modern portfolio theory and risk | Investors prefer higher return for equal risk. Investors prefer lower risk for equal return. |
| Risk Management Framework |
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Framework (image/png)
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