Managerial Finance Essay Example | Topics and Well Written Essays - 1500 words - 1

Managerial Finance - Essay ExampleAny effort that could increase profits above the hurdle forget be ignored since the manager after meeting such pre-set goals pass on relax.Again, setting hurdles will also work against the regional executives since different policies take up investments differently according to the given country. Each country has a different inflationary level, lending rate, political stability and other cultures which together or by the piece affects investments. Setting a uniform hurdle rate is being unfair to countries with unfavourable investment policies.2 Investing in Lower risk projects will normally be a favourite of the lower division managers since chances of them losing out on the investment is limited. This however, will always come with unfavourably low or unattractive incomes. While this might appear favourable to the managers, it may turn out to be a dislike of the shareholders. Shareholders would want to maximize profits without regards to risks i nvolved, mend the managers are more concerned about the risks involved in each venture.Risk is may be defined as the standard difference of diminish on an investment or portfolio of assets. It is measured using different methods including Value at risk. It helps business men to get prepared for the potentially turbulent mart and is quoted in terms of percentage and fixed time horizon (Kwon Joon Chang, 2008).If a 77% one day of value at risk, and the security of 6%. This delegacy that the estimate for the example is that in the next one day, there is 77% chance that the security will not lose more than 6% of its value. The comparison may be written as VaR = infx R P (L x) 1 It does not take into account the downside potential in moorage the portfolio encounters the one percent chance that it exceeds the loss threshold. In other words, once the losses exceed the threshold,