Posted: March 23rd, 2023
The role of VaR in Enterprise Risk Management: (Note: There is an excel template that should be used for this case study in questions 2-3 and please use word for the answer to question #4.)
Mr. Young is the CFO of a $49 million revenue logistics company and has excess cash funds to invest into a specific stock. Based upon his research, he has found that Tesla maybe an opportunity to invest excess cash that has built up over the past year from record profits. Tesla, as Mr. Young feels, is on the cutting edge of electric automobiles to the masses, has a current stock beta of .97 (which means that the risk is low as it is below a threshold of 1.00), and overall high growth potential. However, he wishes to use the VaR calculation to quantify the upside and downside risk to the company to help him recognize if Tesla stock is a good choice. Please see below for the assignment parameters.
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