Treasury and Risk Management

Paper Summary:

This paper discusses the increased responsibilities of the Treasury in financial risk management even as it illumines the workings of the financial market, functions of financial institutions, characteristics of financial products, purposes of commoditization, and the past and future trends of financial markets.

Table of Contents:
Introduction
Risk Management
Financial Markets
Institutions and Intermediaries
Commoditization
Mark-to-Market Schemes

From the Paper:

"Of these financial products, trade in hedge funds is the least popular because of perceptions that these funds are fraught with risks. In fact, China closed its derivatives exchange for hedge funds in 2005 when trade in credit derivatives brought losses to hedge fund holders, after an expected default corrections in the corporate credit markets failed to materialize. As a derivatives instrument, the hedge fund is a financial obligation whose value is derived from an underlying asset, reference and index rates or interest rates, the result of a specific event or the price of an underlying asset such as debt equity or commodities."

Sample of Sources Used:

• Conrad, K. & Glenzer, J. 2006. Treasury's Growing Role in Risk Management. Risk! Newsletter, Association for Financial Professionals. Webpage design available at:http://www.afponline.org
• Elton, E.J., Gruber, M.J., Brown, S.J. & Goetzmann, N.N. 2003. Modern Portfolio Theory and Investment Analysis. New York: John Wiley & Sons.
• Jackson, D. 2006. Brokers, Financial Advisors and Investing for the Wealthy. ETF Investing Guide. Webpage design available at: http:/seekingalpha.com/article/98619
• Mason, J. 2008. Openness and Transparency: The Basics of Financial Regulation. Mase: Economics and Finance.
• Mattarocci, G. (2006). Market Characteristics and Chaos Dynamics in Stock Markets: An International Comparison. University of Rome.

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