ABM (Accountancy Business Management)

Financial Activity : Corporate finance is a financial activity. It includes planning, raising, investing and monitoring the finance of the company. In short, it includes all the financial aspects of the company. This work is done by the financial department headed by the finance manager. Risk analysts define expected loss to be the product of probability of default x loss-given-default x exposure at default. In the 10-year loan example, the probability of default is much higher over 10 years than over one year, because (a) default statistics show this to be true and (b) there are ample opportunities in 10 years for borrowers’ creditworthiness to decline and market conditions to deteriorate. Banks can reduce expected losses by requiring exposures to be shorter in terms or requesting good collateral for even stronger borrowers.