Risk Management Techniques

Risk Management Techniques Paper
University of Phoenix
FIN
415
DATE

Risk Management Techniques Paper
When it comes to business and investments essay is a very critical word. It is impossible to eradicate or avoid all risks however, one can at least(prenominal) manage risks. The first step is to identify the risks. Just the like there are some(prenominal) types of risks, there are several types of techniques to put on to avoid risks. The use of these techniques is very important in business. Once an organization identifies the problem or risk, they essential and then judge them and come up with a solution. The following get out describe four risk management techniques: anticipate crop of return, required stride of return, and standard deviation. A description of their use and how to apply these techniques lead also be illustrated in this paper.
expect Rate of Return
The first technique is the expected rate of return. The expected rate of return is outlined as the return on an investment as estimated by an asset pricing deterrent example (The Free Dictionary, 2012, para. 1). Investors want to know how much coin they will make off an investment. The formula to calculate the expected rate of return is (Probability of Outcome x Rate of Outcome) + (Probability of Outcome x Rate of Outcome) = Expected Return Rate.



The probability of outcome must add up to 100%. The next step is to sparking plug in the numbers. By using this technique, businesses and investors alike can evaluate how much their stocks or investments will potentially earn them.
call for Rate of Return
Required rate of return or RRR is defined as the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project (Investopedia, 2012, para. 1). It is utilize when assessing equity and in corporate finance. Investors also use RRR to seek to decide where they should invest their money.
Businesses or corporations use RRR to decide whether or not they should start...If you want to get a full essay, enact it on our website: Orderessay



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