Intro -- Risk Management and Financial Institutions -- Contents in Brief -- Contents -- Business Snapshots -- Preface -- New Material -- Slides -- Questions and Problems -- Instructor Material -- Acknowledgments -- 1 Introduction -- 1.1 Risk vs. Return for Investors -- 1.1.1 Quantifying Risk -- 1.1.2 Investment Opportunities -- 1.2 The Efficient Frontier -- 1.3 The Capital Asset Pricing Model -- 1.3.1 Assumptions -- 1.3.2 Alpha -- 1.4 Arbitrage Pricing Theory -- 1.5 Risk vs. Return for Companies -- 1.5.1 Bankruptcy Costs -- 1.5.2 Financial Institutions -- 1.5.3 Regulation -- 1.6 Risk Management by Financial Institutions -- 1.7 Credit Ratings -- Summary -- Further Reading -- Practice Questions and Problems (Answers at End of Book) -- Further Questions -- Part One Financial Institutions and Their Trading -- 2 Banks -- 2.1 Commercial Banking -- 2.2 The Capital Requirements of a Small Commercial Bank -- 2.2.1 Capital Adequacy -- 2.3 Deposit Insurance -- 2.4 Investment Banking -- 2.4.1 IPOs -- 2.4.2 Dutch Auction Approach -- 2.4.3 Advisory Services -- 2.5 Securities Trading -- 2.6 Potential Conflicts of Interest in Banking -- 2.7 Todays Large Banks -- 2.7.1 Accounting -- 2.7.2 The Originate-to-Distribute Model -- 2.8 The Risks Facing Banks -- Summary -- Further Reading -- Practice Questions and Problems (Answers at End of Book) -- Further Questions -- 3 Insurance Companies and Pension Plans -- 3.1 Life Insurance -- 3.1.1 Term Life Insurance -- 3.1.2 Whole Life Insurance -- 3.1.3 Variable Life Insurance -- 3.1.4 Universal Life -- 3.1.5 Variable-Universal Life Insurance -- 3.1.6 Endowment Life Insurance -- 3.1.7 Group Life Insurance -- 3.2 Annuity Contracts -- 3.3 Mortality Tables -- 3.4 Longevity and Mortality Risk -- 3.4.1 Longevity Derivatives -- 3.5 Property-Casualty Insurance -- 3.5.1 CAT Bonds.
