Investment & Risk Management Courses

Investment. Risk management. Financial management. In modern economies, few words strike more fear into a trader's heart than these words. The fact is, securities-exchange players draw up sound investment strategies to make sure they don't stake out trading success on risky bets. Investment and risk management courses instruct on key financial concepts, as well as how financial-market participants navigate economic fluctuations.

Financial Risks

By analyzing financial risks before making trades, investors put more emphasis on factors such as the state of the economy, market risk appetite and corporate profitability. Financial exposures include market, credit and foreign-exchange risks. Market risk is the loss that arises when an investment portfolio decreases in value because of lower asset prices. Credit risk comes from a business partner's inability to repay a loan owing to bankruptcy or financial distress. Foreign-exchange risk -- a derivative of political risk -- is the loss expectation stemming from adverse movements in currency values, often due to economic or political conditions overseas.

Securities-Exchange Players

Financial-market participants are a vibrant part of the global economy. They help companies raise cash to fund operating activities even when lenders shut their vaults to non-performing, less creditworthy businesses. By bidding stock prices up and down, securities-exchange players also give public officials useful hints about the economic pulse rate, especially if authorities seek market signals before implementing financial policies. For example, the Federal Reserve Bank may assess how the market reacted to a previously issued jobs report before making a decision on monetary policy. Financial-exchange players include investment banks, hedge funds, traders, portfolio managers, regulators and individual investors.

Investment Analysis

Investment analysis enables securities-exchange players to reach their trading zenith, and never come back from it or stay there as long as possible. By studiously analyzing the securities of different companies, investors often find "financial gems," undervalued stocks or bonds that may have great profit potential in the future. To ensure trading success later on down the road, investors rely on various tools, the most important of which are financial ratios. Examples include return on equity, or ROE, and quick ratio. ROE determines the rate of return on invested capital and equals net profit divided by net worth. Quick ratio equals cash plus accounts receivable divided by current liabilities. This metric indicates a firm's ability to repay its debts without selling merchandise.

Role of Central Banks and Regulators

Government watchdogs weigh in risk management activities, ensuring that investors do not pose a systemic risk to the entire market through their actions. A systemic risk -- or fundamental exposure -- could cripple an adequate functioning of global financial markets, a key concern in a modern-day economy replete with business interrelations. Key financial regulators include the Federal Reserve Bank, the U.S. Securities and Exchange Commission and Japan's Securities and Exchange Surveillance Commission.

References

• International Foundation of International Foundation of Employee Benefit Plans: Investment Courses at the Wharton School
• New York Institute of Finance: Investment & Portfolio Management
• New York Institute of Finance: Fundamentals of Risk Management
• New York Institute of Finance: Risk Management for Financial Institutions