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Risk Management in Investments

Risk management relates to reducing the cost of risk, meaning reducing the cost of the actual management of risk. People invest their money, whether it's in bonds or stocks, with the hope of acquiring profit or gains. The question one shall ask regarding risk management, is the risk appropriate given the returns?

a) Therefore, please select a Fortune 500 Company that is facing challenges similar those stated above (risk management in terms of a company's investments), and describe a series of optimal financial strategies for that company. This description should include an evaluation of the company's financial performance and a discussion of financial strategies.

b) Consider whether a merger or acquisition could positively impact your chosen Fortune 500 Company's strategic outlook. Describe the pros and cons for such a venture, including possible synergies, cost savings, and moral issues.

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a) Let's think about Hewlett Packard (HP). The company is world's largest computer and electronics company, ranking 11th in the Fortune 500 list and has a powerful team of 142,000 employees doing business in more then 170 countries. The company had has headquarters in countries like Canada, Singapore, Japan and Switzerland and it's Research and Development (R&D) investment of nearly $4 billion continuously fuels the invention of new products, solutions and technologies. HP's quick ratio has made a great increase in the last three years which is a sign of increasing liquidity improvement for the creditworthiness of the company.

As the competition increases, the firm needs to establish investment strategies that can provide adequate funds for the new projects to compete with other rivals like Dell, Toshiba etc... Stocks can offer greater returns in the short term but they ...

Solution Summary

Risk Management in Investments is studied.