FNCE 3P93 Chapter Notes - Chapter 24: Enterprise Risk Management, Market Failure, Trade Credit

• School: Brock University
• Department: Finance
• Course: FNCE 3P93
• Professor: Geoffrey Hoover

Document Summary

Credit to other firms is called trade credit. The terms of sales are made up of 3 distinct elements: The impact of financial risk: the credit crisis of 2007-2009. Granting credit makes sense only if the npv of doing so is positive. 5 basic factors must be considered when evaluating the credit policy: Trade credit exists due to market imperfection. Trade credit exists due to market imperfections. Lo1: understand the use of insurance as a risk -management tool. Lo2: know the sources of financial risk. Lo3: be able to identify specific financial risks faced by firms. Lo4: understand the basics of hedging with forward contracts and futures.