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BAFN307: Management Assignment - FINANCIAL RISK MANAGEMENT: PROTECTING THE ENTERPRISE - Australian Catholic University
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Internal Code: MAS4476
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 core customers; 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.
B) Please explain, generally, why your risk management strategies are largely similar or different among the two institutions, based on your answer in c). In another word, would different finance industries adopt same or different risk management strategies for the same financial risks? Please explain.
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Questions: Question: Obtain the 2015-16 financial statements of (i) Westpac Bank; and (ii) AMP. a) Prepare the following schedule:
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 core customers; 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.
B) Please explain, generally, why your risk management strategies are largely similar or different among the two institutions, based on your answer in c). In another word, would different finance industries adopt same or different risk management strategies for the same financial risks? Please explain.