Financial decisions or investments are made with the assessment
of risk trade-off. How would that risk change if the firm were
large? Small? Medium sized? Why or why not? Provide an example in
your response and some specificity to your ideas.
What is the risk–return trade-off that arises when a firm
manages its working capital?
• How does a firm’s use of short-term debt as opposed to
long-term debt subject the firm to a greater liquidity risk?
• explain how accounts receivable are created and managed, and
calculate the cost of trade credit
IN DEPTH ANSWER PLEASE
1. Discuss the concept of the risk-return trade-off and how it
may apply in different circumstances.
2. Outline the risk-reduction benefits of diversification of an
investment portfolio. In your answer, briefly discuss how portfolio
diversification works in principle to minimise overall investment
risk.