Purchase Solution

Business risk, financial risk, and portfolio risk

Not what you're looking for?

Ask Custom Question

Scenario:

The Hammons, Tim (35), Anna (32), children Mary (13) and Mark (11), consider themselves among the typical up and rising middle class. Overall, by today's standards, they have achieved a fair level of success: they are buying a home, have a modest savings account, and hold some investments. After serving 4 years in the military as an intelligence agent, Tim currently holds the position of plant manager at a local firm. Anna, a stay-at-home mom, is considering starting a private duty nursing service for the terminally ill. Based on her previous experience as a registered nurse, she fully understands the demand for private nursing care and the relatively low level of supply.

Over the years, the Hammons have had lengthy discussions about their future aspirations and dreams for themselves and their children. Future plans include having sufficient funds to help the children with their educational pursuits, buying a family vacation home on the beach in South Carolina, and retiring when Tim reaches the age of 55.

When Tim and Anna reach retirement, they aspire to continue enjoying their current standard of living, travel internationally, and spend ample time with family members located throughout the United States and Canada. Tim and Anna dream of living comfortably, but they also desire to leave a well-endowed estate for their children.

The Hammons appreciate the importance of having an adequate financial plan that incorporates their desires, so they have contacted you, a licensed financial planner, to help guide them through the process. Based on their objectives, you have proved the following timetable for the Hammons:

Short-term

Review, estimate, and purchase insurance coverage for both Tim and Anna.
Develop and implement an investment plan to achieve the family's objectives.
Develop a strategic plan for Anna's private duty nursing service.
Long-term

Implement Anna's private duty nursing service.
Purchase a beach home in South Carolina.

Problem:
After having read some information about the various risks that firms encounter, the Hammons have asked you to investigate and analyze specific risks they may encounter as owners of a private duty nursing service. Your investigation and analysis should be specific and focused on three areas: business risk, financial risk, and portfolio risk.

Purchase this Solution
Solution Summary

This explains the business risk, financial risk, and portfolio risk

The solution has only Book reference.

Solution Preview

Problem:
After having read some information about the various risks that firms encounter, the Hammons have asked you to investigate and analyze specific risks they may encounter as owners of a private duty nursing service. Your investigation and analysis should be specific and focused on three areas: business risk, financial risk, and portfolio risk.
Risk is an aspect of any organization's operation. When it is recognized, understood, and managed, risk can set the stage for sustainable growth. Companies need identify risk within their operations and plan a systematic approach to managing it.
According to www.anao.gov.au:
"Effective risk management contributes to better decision-making because it develops a deeper insight into risks and their potential impact. It is a structured and disciplined approach: it aligns strategy, processes, people, technology, and knowledge with the purpose of evaluating and managing the uncertainties the enterprise faces as it creates value."
For our current purposes, we can classify the risk of a firm into two ...

Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management

    The concept also includes the environmental and societal aspects of the business with the financial aspects of the business and rights of personnel.

  • Strategic Financial Management

    Here the cash flow risk includes the business risk (a risk associated with the operating cash flow including sales, revenue and expenditure of the company) financial risk and the default risk whereas the reinvestment risk includes prepayment risk and

  • Financial Planning & Risk

    Portfolio Construction, Management, and Protection [With Stock-Trak] (5th ed.). USA: Cengage Learning. The solution discusses financial planning and risk.

  • Do we need CAPM for capital budgeting?

    Jagannathan and Meler indicated that if a business has to decide among a number of securities or portfolios, and the net present values of each security or portfolio clearly points to one of them, then that business could use the NPV method to determine

  • Portfolio Strategy for Toyota

    that will be used by Toyota to maximize wealth: Portfolio Strategy To analyze different issues such as introduction of an independent growth path to a high-risk business, capture of the portfolio strategic risk in an appropriate manner and measurement

  • Explain how risk affects corporate financial strategy.

    Business risk can have great impact on the company's financial strategy as they learn to deal with the risks business applies. Credit Risk Credit risk has an impact on financial strategy, because it brings uncertainty.

  • VI Financial Management assistance

    The first risk comes from the general conditions of the economy like interest rate, inflation, exchange rate, and business cycle fluctuations.

  • Portfolio Performance of Daimler Chrysler & Citigroup

    An investor can change its portfolio on the base of return and risk in a company's portfolio. Many financial institutions obtains fund from a large number of investors through the sale of shares and bonds.

  • Expected return and Standard Deviation of a portfolio, CAPM

    PROBLEM 3 A portfolio that combines the risk-free asset and the market portfolio has an expected return of 22 percent and a standard deviation of 5 percent.

View More Related Solutions