An Analysis of Risk Treatment in the Field of Finance

Fernando Gómez-Bezares () and Fernando R. Gómez-Bezares ()
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Fernando Gómez-Bezares: Deusto Business School
Fernando R. Gómez-Bezares: Mutua Madrileña

Chapter 60 in Encyclopedia of Finance, 2022, pp 1397-1409 from Springer

Abstract: Abstract This chapter studies the way to introduce risk into financial analysis. It suggests and analyzes metrics to improve the classic methods, like the Sharpe and Treynor ratios or the Net Present Value. In particular, the chapter suggests a linear penalization method developed by the authors, applying it to performance indexes and capital budgeting, and considering both total and systematic risk. The method shows obvious advantages in comparison with traditional methods.

Keywords: Capital budgeting; Linear penalization; Performance; Risk (search for similar items in EconPapers)
JEL-codes: G11 G31 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-91231-4_60

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DOI: 10.1007/978-3-030-91231-4_60

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