BAFN307 : FINANCIAL RISK MANAGEMENT: PROTECTING THE ENTERPRISE - Australian Catholic University(ACU)

Question 1 :  Obtain the 2015-16 financial statements of (i) Westpac Bank; and (ii) AMP. b) Explain the distinguishing characteristics of the two entities with respect to the five assets and liabilities in a) under the following headings: i) Core customers; ii) Duration distribution (in %) of assets (long (10 years or over); short-term (5 years or less); or medium (between 5 and 10)); iii) Duration distribution (in %) of liabilities (long (10 years or over); short-term (5 years or less); or medium (between 5 and 10)); iv) Duration matching of assets and liabilities. c) Which of the following risks is each of the two entities most vulnerable of: interest rate; credit; foreign exchange; collapse of financial markets; or off-balance- sheet? Please justify, with supporting data and calculations where appropriate. d) What regulatory measures are in place in Australia to protect (i) the corecustomers; and (ii) the core investors (viz. stock holders) of each of the three entities? Please explain. Question 2: A) Imagine you are in charge of risk management for each of the two financial institutions.Please explain a strategy that you would implement to manage each of the following risks for each of the three financial institutions (i.e. a total of 10 strategies). i) interest rate; ii) credit; iii) foreign exchange; iv) collapse of financial markets; v) off-balance- sheet. There should be sufficient details for each strategy to warrant its practicality.