Investment isk and the Insurance Cycle in the New Millennium," Charles uoff brings some very valid points regarding the insurance industry and investment risk to light. The paper is valuable and valid, as it points out the importance of investment diversification to eliminate unnecessary enterprise and asset risk. This paper will further expand upon these concepts and idea.
uoff points out in his article that there are many situations relative to the market and investing environment that directly affect the risk ratio for insurance companies. For example, he points out that during 1990 Executive Life Insurance Company "demonstrated the lack of liquidity in a portfolio dominated by junk bonds" (uoff, 2003). In the present market, as the article points out, the economy is faced with falling stock prices and default on bonds, which often result in insolvencies (uoff, 2003). The condition of the economy is constantly changing; as a result…...

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Reference:

Ruoff, Charles L. "Investment Risks and The Insurance Cycle In The New Millenium." July, 2003

measure risk?
isk is a "yin" to the yang of investment, which would be performance. In a nutshell, risk is a deviation from the standard and expected outcome. In other words, let us say there is the expectation that a certain stock will keep soaring. isk is the perceived or actual probability that this will not happen. The usual tool and metric used to measure risk is standard deviation. Standard deviation is the measure of how far from the norm or average that a stock or other investment performs.

What are the different types of risk affecting the securities and portfolios held by individuals and corporations? Discuss

In general, there are two types of risk, those being active and passive. The common measurement that comes forth when it comes to measuring risk is the "beta," which is basically another way of saying how volatile the security or how likely it is that…...

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References

Investopedia. (2016). Investopedia - Sharper Insight. Smarter Investing. -- Investopedia.

Investopedia. Retrieved 29 June 2016, from  http://www.investopedia.com 

Kantchev, M. (2016). Pound Plunges on U.K. Vote to Leave the European Union. WSJ.

Retrieved 29 June 2016, from  http://www.wsj.com/articles/u-k-pound-jumps-after-brexit-polls-close-1466718460

isk and Insurance Management
isk is believed to be a newly coined word of assurance (for example, Ewald, 1991: 198). One of the broadly shared suppositions regarding insurance is that it spins around an instrumental concept of risk. Possibility and the amount of influence make up a technical concept of hazard/risk and hazard administration is chiefly worried about reviewing these possibilities and influences (for an overview see Gratt, 1987). For instance, external profits of financial or political occurrences lay down thresholds for the availability of associated risk guesstimates or reckonings (Huber, 2002).

So, the range of the risk groups cannot be clarified by risk judgment single-handedly; peripheral circumstances that could be political, financial or inclusive of image, arts and manners, are also required to be taken into account. Therefore, if risks are not be present, per se, but are deliberately selected, we can go a step ahead and presume them to be…...

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References

Douglas, M. And Wildavsky, A. (1982) Risk and Culture. An Essay on the Selection of Technical and Environmental Dangers. Berkeley: University of California Press.

Evers, A. And Nowotny, H. (1987) Uber den Umgang mit Unsicherheit. Die Entdeckung der Gestaltbarkeit von Gesellschaft. Frankfurt / Main: Suhrkamp.

Ewald, F. (1991) 'Insurance and Risk' in Burchell, G., Gordon, C. And Miller, P. (eds.) The Foucault Effect: studies in governmentality . London: Harvester Wheatsheaf.

Gratt, L.B. (1987) 'Risk Analysis or Risk Assessment: a proposal for consistent definitions' in Covello, V. And Lave, L. (eds.) Uncertainty in Risk Assessment, Risk Management and Decision Making, Advances in Risk Analysis (4). New York: Plenum Press.

Investments are the assets or items purchased with the anticipation to generate the income in the future. In the economic sense, investments refer to the goods and services purchased and not consumed today for the purpose of generating wealth in the future. Similarly, going to a university or building a factory to produce goods and services are the examples of investments. Within a financial environment, investors purchase assets with the hope that they will appreciate in the future, thus, creating wealth for the investors. Examples of investment in the financial circle include purchasing of stocks, or real estate property with the anticipation that they will appreciate in the future. Despite the benefits that can be derived from the investment purpose, the investment is not something an individual can take lightly. Investors are to implement a careful planning to reap the benefits of an investment. Typically, an investor can lose his…...

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Reference

Costa, D. (2011). The Portable Private Banker Investing Efficiently through Mutual Funds and ETFs. UK. CreateSpace Independent Publishing Platform.

Morningstar (2014). Exchange Traded Funds, Morningstar website. Avaliable from:

 http://news.morningstar.com/etf/Lists/ETFReturns.html 

Morningstar (2014). ProShares Ultra Nasdaq Biotechnology BIB, Morningstar website. Avaliable from:  http://performance.morningstar.com/funds/etf/total-returns.action?t=BIB&region=usa&culture=en-U.S .

(Steward, 2008, ¶ 15).
II: BODY (TITLE TO BE DETERMINED)

Introduction

To explore the thesis, introduced at the start of the paper, the writer addresses the question: Do the investment risks that customers of conventional banks and financial houses may experience differ from those customers of sharia compliant financial institutions may encounter? During this segment of the research paper, the writer relates relevant information to Investing (Including Risks)

Investments

Contemporary Considerations

Investing (Including Risks)

Investments

Sukuk depict one type of bonds that meet the sharia requirement that interest cannot be charged or received. Sukuk often work so that those who hold them as investments are entitled to a share of the profits of the company that issued the sukuk.

Contemporary Considerations

III. CONCLUSION

A. Analytical summary

1. Investing (Including Risks)

2. Investments

3. Contemporary Considerations

B. Thesis reworded

C. Concluding statement

REFERENCES

Adam, N.J. & Thomas, A. (2004). Islamic bonds: Your guide to issuing, structuring and investing in sukuk. London, United Kingdom: Euromoney Books.

Bennett, D. (2007). The…...

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Wecker, M.. (2010). The promise of Islamic banking and finance. The Arab-American News

Retrieved September 28, 2010 from HighBeam Research:

 http://www.highbeam.com/doc/1P3-1961427951.html

investment management in the financial sector. The paper highlights the world's present macroeconomic situation. It further details the macro economic situation and the way it affects investment decisions in several investors. In addition, the paper describes a sample investment programme and provides critical decisions to investors as well as investment vehicles used by the investment moguls. The paper summarises practical exercises in compound investment management growth and the use of capital investment.
Investment management is an important part of the global financial sector, which is key in financing vast business empires. Investment management is incorporated under state laws employing several individuals and creating revenue to key players in the financial market. It is the management of several securities and assets to meet specific objectives for the benefit of the investors. The products used known as investment vehicles can be of minimal risks such as government bonds; carry high risks such…...

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References

Development Policies and Anaysis Division. (2012). World Economic Situation and Prospects. Retrieved May Friday, 2012, from www.un.org:  http://www.un.org/en/development/desa/policy/wesp/index.shtml 

B.P.Eregha. (2010). Interest Rate Variation and Investment Determination in Nigeria. International Business Management Journal, 41-46.

Blume, M. (1978). Inflation and Capital Markets. Cambridge: Ballinger.

Contrarian Investor's Journal. (2008, July 6). Effects of inflation on value of investment. Retrieved May Friday, 2012, from www.cij.com: http://cij.inspiriting.com/?p=482#

risk and return for an investment portfolio that includes five asset categories: stocks, bonds, mutual funds, options, and precious metals. The purpose of diversified portfolio investment is to maximize portfolio expected return for a given level of risk, or to minimize risk for a specific level of expected return. This paper reviews mathematical formulae for modeling risk and return which provide a rationale for investment strategies and portfolio management. The paper also discusses risk and return objectives and expectations, along with investment risk profiles.
Risk vs. Return Measurement

In an ideal world, the typical investor would select investments whose attributes include high returns coupled with low risk. In reality, there are few of these kinds of investments available, consequently financial managers have gone to great lengths to develop methods and strategies that allow them to come as close as possible to selecting the ideal investment. One such financial theory for managing…...

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Piazza, J. (n.d.). Objectives and risk. Sensible Investment strategies Web site. Retrieved May 26, 2011 from http://www.seninvest.com/objectives.htm

Risk Measures. (2011). Investopedia Web site. Retrieved May 26, 2011 from  

isk, eturn and Their Evaluation
isk & Performance Indicators

Since this is a small business, therefore raising equity capital through public stock issue is less likely than debt or whatever form of paper issued to angel or venture investors. Therefore while a larger, publicly traded firm would consider the return on equity version of the short form DuPont equation, a small, more closely-held concern would focus on return on assets (OA). If OA is net income over sales times sales over total assets, i.e. net income over total assets, then any action that could increase the numerator, total income, or shrink the denominator(s) should increase OA compared to past performance within the firm and the competition outside it. If competitors all use the same (best) plant, then maximizing efficiency of the same assets through process or brand innovation; input cost reductions, and also financial performance like minimizing payables days over days receivable…...

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Reference

Investopedia (2011). How to calculate required rate of return. Forex. 25 Feb. 2011. Retrieved

from  

Risk Sales Forecast
Budgeting, Sales Forecasts, and Ethical Consideration

Sales forecasts and the budget preparation process in general, serves as a cornerstone for effective operations management. hen this practice is performed with strict adherence to good business ethics it is one of the key components of the entire business planning process. ith reliable estimates the organization can plan appropriates. Financial planning and estimation includes forecasted sales and revenues, expenses, and required cash flow to operate the business.

The budget will then combine all of the different estimates into a comprehensive document that can be used to plan for the future and to make business decision. The first activity in the budgeting process is usually a sales forecast. Once an organization determines what their projected levels of sales will be for any period, they can then estimate the other expenses based on this forecast. Accuracy of the sales forecast therefore is paramount to the…...

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Works Cited

Decker, R., & Gnibba-Yukawa, K. (2010). Sales Forecasting in High-Technology Markets: A Utility-Based Approach. The Journal of Product Innovation Management, 115-129.

Todd, S., Crook, T., & Lachowetz, T. (2013). Agency Theory Explanations of Self-Serving Sales Forecast Inaccuracies. Sciedu Press, 13.

isks in Export Market
There is need for companies to develop a professional approach before venturing into the exporting business. The management of the company is supposed to be committed extremely as well as devoting time and money in commencing the campaigns of export. A company is supposed to be ready to face greater competition as well as more stringent rules and regulations concerning products and packaging due to the variance in rules to which or across which the company will be exporting.

In the process of exportation, there are a number of risks that the company will face. These elements of risks are encountered in every commercial transactions as well as the complexity of the environments that exporters operate in. The content of this paper will analyze risks that a company can face while entering the field of exporting as well as discussing the roles of intermediaries in the field of…...

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References

Aaby, N. & S. Slater. (1989). Management Influences on Export Performance: A Review of the Empirical Literature1978-88. International Marketing Review, 6: 7-26.

Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, (2007). "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17: 99-120.1997. Gaining and Sustaining Competitive Advantage. Reading, MA: Addison.

Cornelius Bothma (2012). Managing your export risk. EXPORTHELP. Retrieved April 13, 2012 from  http://www.exporthelp.co.za/modules/10_risk/intro.html

74). This dearth of information was likely caused by a reluctance to examine investment decisions on the part of investors themselves; nobody likes finding out that their "thought-out" considerations are not any more accurate than gut choices, and in fact, those gut choices likely had more influence than all of their mental work.
In the last decade, however, strides have been made in the study and analysis of investment behavior, revealing surprising details about what goes in to making stock trades. The first important work in the study of individual investment behavior was the realization that human beings do not always act rationally in regards to financial decisions, because according to the previously quoted Brad Barber and his co-author Terrance Odean, "the field of modern financial economics assumes that people behave with extreme rationality, but they do not" (Barber & Odean, 1999, p.41). Although "differences in investor literacy about financial markets"…...

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Works Cited

Barber, Initials, & Odean, Initials. (1999). The courage of misguided convictions. Financial Analysts Journal, 55(6), 41-55.

Dhar, R, & Zhu, N. (2006). Up close and personal: investor sophistication and the disposition effect. Management Science, 52(5), 726-740.

Grinblatt, M, & Keloharju, M. (2001). What makes investors trade?. The Journal of Finance,

56(2), 589-616.

These types of investments are often illiquid, so the investor needs to view them as long-term investments. However, the lack of liquidity also means that for the most part they have low levels of correlation with the broad market.
Derivatives are another possibility, and their potential impact on the portfolio will be discussed in the next question. They can either increase risk or decrease risk, depending on the type of derivative and how it is used.

Overall, the impact of alternative investments is to reduce the degree to which the portfolio is subject to the equity and fixed income markets. Alternative investments are often used as an ancillary component of the portfolio, to reduce the portfolio's overall volatility but with the hopes that returns will not suffer as a result.

3. Derivatives can be used for a couple of different purposes in a portfolio. The first is to increase leverage (risk), thereby…...

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Works Cited:

De Santis, R. & Sarno, L. (2008). Assessing the benefits of international portfolio diversification in bonds and stocks. European Central Bank working paper. Retrieved May 6, 2010 from  http://www.ecb.int/pub/pdf/scpwps/ecbwp883.pdf 

Driessen, J. & Laeven, L. (no date). International portfolio diversification benefits: Cross-country evidence from a local perspective. International Monetary Fund. Retrieved May 6, 2010 from http://www.luclaeven.com/papers_files/Diversification_JBF_final.pdf

Lhabitant, F. (2000). Derivatives in portfolio management: Why beating the market is easy. EDHEC. Retrieved May 6, 2010 from  http://www.edhec-risk.com/edhec_publications/RISKReview1055927251987929638/attachments/EDHEC_WhyBeatingTheMarketIsEasy.pdf 

Schweizer, D. (2008). Portfolio optimization with alternative investments. European Business School. Retrieved May 6, 2010 from D.pdfYavas, B. (2007). Findings indicate that co-movements among the U.S., Germany and Japan markets are significant. Pepperdine University. Retrieved May 6, 2010 from  http://gbr.pepperdine.edu/072/diversification.htmlhttp://www.wbiconpro.com/339-Schweizer,

This was because they were seeing one of their primary competitors (Travelers) merging with Citicorp (which created a juggernaut of: insurance, banking and brokerage activities). At which point, executives at AIG felt that in order to: maintain their dominance in the industry and offer new products they should become involved in similar activities. The difference was that they would grow the company by expanding into areas that were considered to be speculative to include: commodities, stocks, options and credit default swaps. The way that this was accomplished is by purchasing a host of businesses that were involved in these activities. This is significant, because it meant that a shift would take place in: how managers were accounting for risks and the kinds of activities that they were becoming involved in. With the newly acquired companies; bringing over executives that did not practice the same kind of strategies for dealing…...

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Bibliography

Travelers, Citigroup Unite. (1998). CNN. Retrieved from:  http://money.cnn.com/1998/04/06/deals/travelers/ 

US saw 13 Bank Failures Every Month in 2010. (2011). Economic Times. Retrieved from: http://articles.economictimes.indiatimes.com/2011-01-02/news/28424370_1_medium-banks-bank-failures-problem-banks

Baum, C. (2009). The Impact of Macro Economic Uncertainty. Boston College, Boston, MA.

Byoun, S. (2007). Financial Flexibility. Baylor University, Waco, TX.

Part of the overall calculation of uncertainty according to iskMetrics recommendations, however, should include a calculation of correlative uncertainty (Finger 2007). The rationale for including this specific uncertainty in calculations is that it helps to account for inaccuracies and inadequacies in the model, determining the level of risk associated with incorrectly defined or changing correlations used by the model in other calculations and definitions (Finger 2007). An accurate calculation of uncertainty and risk will necessarily include a calculation of the correlative uncertainties attendant upon the model and the situation to which it is applied, providing not a necessarily more accurate view of direct risk, but a useful evaluation of the risk prediction's efficacy.

iskMetrics Calculations: Exposure and Uncertainty

An accurate and well-developed combined understanding of the exposure and uncertainty of a various investment venture or portfolio contributes a nearly complete understanding and assessment of the risks presented by that investment option/portfolio. There…...

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References

Andren, N.; Jankensgard, H. & Oxelheim, L. (2005). "Exposure-Based Cash-Flow-At-Risk under Macroeconomic Uncertainty." Journal of applied corporate finance 17(3), pp. 21-31.

Argentin, P. (2010). "Two-sided counterparty risk." RiskMetrics Group: On the Whiteboard. Accessed 24 September 2010.  http://www.riskmetrics.com/on_the_whiteboard/20100615 

Finger, C. (2007). "We identify two main versions of correlation risk -- parameter uncertainty and new financial products -- and examine the modeling challenges implied by each." RiskMetrics Group: Research Monthly. Accessed 24 September 2010.  http://www.riskmetrics.com/publications/research_monthly/20070400

nvestments: Stock Selection
On March 9, 2009 the stock market settled on a 12-year closing low with the Dow Jones ndustrial Average (DJA), a barometer of the economy and stock market trajectory, closing at 6,547.05. (Twin, A. March 9, 2009). The precipitous plunge for the DJA from an "all-time high of 14,164.53" (Twin, A. October 9, 2007) reached on October 9, 2007 marked the timeline of the country's worst recession since the Great Depression. From the historic lows however, the market has rebounded dramatically closing at 12,105.78 on February 23, 2011, a gain of over 75% from the March lows (CNBC.com. February 23, 2011). The vicissitudes of the stock market over the past three plus years limn the debate over whether an investor who is risk averse would choose to invest in a stock market in which all stocks rise and fall together, or a market in which individual stocks move…...

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Investors are marked by two extremes, the active investor who tracks, analyzes, and disseminates information on the companies in their investment portfolio, the economy, and global financial news which may influence the direction of their stock investments. At the other extreme is the investor who is socking away their five percent contribution with company match into their 401K. This investor cedes to expert portfolio managers, or trusts in the long run upward trend of equities as defined in index funds: S&P 500, Wilshire, and DJIA. While there are investors at both extremes the vast majority fall at some point on the spectrum, engaged but not able to fully commit the time or resources to portfolio management.

In this context the risk-averse investor will likely fall in with the preponderance of investors who have investment portfolios but are not actively managing them. The investor's portfolio may have individual stocks, mutual funds, or index funds. Which leads to the question, which environment would an investor desire to be in to attain their goal of reduced risk concomitant with acceptable return? The answer ironically comes from the same source, yet at bifurcated ends of an investment philosophy.

Warren Buffett considered the world's most accomplished and successful investor for over fifty years posits that a risk-averse individual could reach their investment objectives in either economic environment. In 2009, Warren Buffett entered into an agreement to purchase the remaining shares of Burlington Northern Railroad which his firm Berkshire Hathaway did not already own. His rationale for the purchase was simple "I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit; it's a bet on the country, basically" (Crippen, A. November 3, 2009). This statement defines an investment strategy which suggests that over the long-term the stock market will generally move higher, the rising tide lifts all boats metaphor. Yes, stocks will fall, sometimes dramatically, across

Understanding Financial Risk: A Key to Informed Investment Decisions

Financial risk is an inherent aspect of investing. It refers to the possibility of losing some or all of the invested capital due to adverse market conditions, economic downturns, or other unforeseen events. Comprehending the nature and extent of financial risk is crucial for individuals to make informed and responsible investment decisions that align with their financial goals and risk tolerance.

Assessing Risk Tolerance

The first step in making sound investment decisions is to assess one's risk tolerance. This involves evaluating how comfortable an individual is with the potential for losses. Risk tolerance is....