Ch 1 · Financial Policy & Corporate Strategy / Risk Management

⭐ Important points (exam-critical)

• ⭐VaR limitations: assumes normal distribution; doesn't capture tail (use Expected Shortfall).
• ⭐COSO ERM framework — integrated approach with strategy, performance.
• ⭐Hedge ratio = correlation × (σ_spot / σ_futures).
• ⭐Distinguish hedging from speculation — intent and offset position.