The Role of VaR in Enterprise Risk Management

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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. White is the CFO of a $46 million revenue service company and has excess cash funds to invest into a specific stock. Based upon his research, he has found that Starbucks is an excellent choice for several reasons, including a current stock beta of .64 (which means that the risk is low as it is below a threshold of 1.00). However, he wishes to use the VaR calculation to quantify the upside and downside risk to the company to help him recognize if Starbucks stock is a good choice. Please see below for the assignment parameters.

  1. Please visit the link below to gain a greater grasp of VaR and its application to risk.
http://www.investopedia.com/articles/04/092904.asp?lgl=rira-baseline-vertical

a. Also, see: http://investexcel.net/value-at-risk-methods-spreadsheets/

b. And, https://www.investopedia.com/ask/answers/033115/how-can-you-calculate-value-risk-var-excel.asp

  1. Next, use Yahoo Finance to gain Starbucks (SBUX ticker symbol) monthly closing stock price from 6-1-2012 to 6-1-2017. Download the information into excel. (There should be 60 data rows) Then cut and paste the date and stock close columns of data into the attached excel template. (VAR Calculation Template) Once this is completed, the template will automatically calculate the dollar and percentage changes in monthly stock prices and graph the data accordingly.
  2. Using a VaR variance/covariance method tab in the excel template worksheet, calculate the value at risk with the following parameters for Mr. White inclusive of the following assumptions:

Portfolio Value: $188,500
Average return – 13.4%
Standard deviation – 10%
Confidence level – 95%
VAR Calculation Template

  1. Based upon the findings of #2 and #3, please use Word to answer:

a. What were your findings of Starbucks VaR benchmarks and what do they mean?

b. Further, please explain what you would advise Mr. White to do in terms of his choice of Starbucks investment for the company and what he should explain to the CEO as to possible risk impact on the company.

Sample Solution

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Dissolution chemistry

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1- What is the pH of a solution saturated with CaCO3 closed to the atmosphere?

2-What is the pH of a solution saturated with CaCO3 open to the atmosphere?

3- For a solution saturated with calcite (CaCO3), how does the solubility of Ca+2 change as a function of pH from 0 to 14 in open and closed systems?

4- Show how the solubility of Fe+2 changes as a function of pH from 0 to 14 given the following recipe [Fe-II] = 10-4 M and a total carbonate conc. (CT) = 10-3 M? Assume closed system.

5-Calculate the composition of a groundwater in equilibrium with PCO2 = 10-1.5 atm, calcite and kaolinite. Disregard all other potential solids.

6-Assuming an open system at equilibrium, only the carbonate system being important, an alkalinity of 1E-3 M and a pH of 9, would calcite precipitate (would solid calcite be present) if the calcium concentration were 1E-3 M?

7-A water contains 135 mg/L Ca+2 and 50 mg/L Mg+2. After the water is softened, the pH = 11 and the carbonate concentration [CO3-2] = 2.6E-5 M. Assume calcium precipitates as CaCO3 (pKs =8.40) Assume magnesium precipitates as Mg(OH)2 (pKs =10.6)

a) Calculate the total hardness (mg CaCO3 mg/L) in the water before softening.
b) Calculate the theoretical total hardness remaining in the water after softening based on the solubility of CaCO3 (s) and Mg(OH)2 (s).
8- A metal plating factor produces a waste containing soluble zinc with a flow of 100 L/min for 8 hours per day. The waste is collected in a large tank. At the end of each day, the pH of the waste is raised to precipitate out the zinc. The sludge is removed and the pH of the supernatants is lower to pH 6 so that is can be discharged to the local sewer system.

a)Consider the removal of zinc from this waste by precipitation as zinc hydroxide (Zn(OH)2, pKs = 16.7). The initial concentration of zinc is 0.01 M. Calculate the pH that the wastewater should be raised in order to reduce the soluble zinc concentrations to
b)One day the operator forgets to remove the sludge before the pH is lowered to 6. He notices that all the sludge disappeared when the pH was lowered to 6. He proudly tells his supervisor that he discovered a method to eliminate the need to dispose of their metal sludge in an expensive landfill. Qualitatively, explain the operator’s amazing discovery. 0.05 mg/L (the EPA limit).

Sample Solution

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Explaining System Performance Requirements

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Refer to the readings Requirements and Developing Requirements for an IT System provided in Week 5, where the types of requirements are defined and examples are given. System performance requirements address quality (how the system must perform) and security. The areas listed are:

Usability
Scalability
Availability
Reliability
Maintainability
Performance
Portability
Interoperability
Security
Protection of data as it is transmitted and when it is stored
User authentication
Authorization of user to perform specific functions
Data backup and recovery
Group 2: For this week’s discussion, Group 2 will post an initial response with:

Choose one of the system performance or security areas listed above
Put the area you selected into the Subject/Title of your posting
Explain what this area means in terms of system performance. Use the definitions provided in the Week 5 Requirements reading. If you need additional clarification, you can search for other sources, but be aware that these terms are defined and used differently for other purposes; be sure you find explanations that support the definition provided in the Requirements reading.
Explain why it will be important to the MTC Hiring System.

Sample Solution

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Development and rapid population growth

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Development and rapid population growth have impacted on global water resources with annual growth in consumption, and there is substantial demand for water conservation technology and desalination projects. Freshwater is a scarce resource only 2.5% of the total water volume on earth is freshwater, with the largest portion of it lying underground. Prepare a report on the following aspects related to water quality standards, characterization and appropriate techniques/methods.

a) Water quality guidelines including emerging water quality issues & monitoring. (1000 words)

b) Wastewater Characterization. (1000 words)

c) Wastewater-techniques and methods. (1000 words)

Sample Solution

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