Risk management is concerned with the tradeoffs between financial risk and reward that inevitably face a firm's managers, its board of directors, and ultimately its shareholders. Although risk management itself is not new, what is new are the complicated financial instruments being used to manage risk-instruments that are frequently classified under the seemingly simple category of derivatives. Use of these instruments have largely gone unreported in financial statements, much to the dismay of financial analysts and in contrast to their ideal of transparency. This volume explains for the financial analyst a firm's use of risk management practices and how those practices can be accounted.
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