HowRu, a private card business and its subsidiary, have a 14% share of the greeting card market. The card business is subject to seasonal cycles, with sales being highest during the holiday season....

Risk
Risk can be defined as the probability of loss or less than expected return which can be
measured in quantitative terms. Risk is the chance that the actual return from an investment will
not be same as the desired return. Risk includes the chance of losing part or whole of the initial
investment. The risk can be calculated by estimating the standard deviation of past returns or
average returns of a particular investment. Higher the standard deviation, higher is the risk
involved.
Generally the companies spend large amount of money and time in formulating the risk
management strategies so as to reduce or mitigate the risk involved in their business or
investment dealings. The risk management process starts with risk assessment which involves
identification of the risk involved in a business or investment.
There is positive relation between the risk and return. Higher the amount of risk, greater
will be the return. The main logic behind this is that investors need to be compensated for taking
extra risk. The investment in United States Treasury bond is considered as the safest or risk free
investment in comparison to the corporate bond and therefore provides the lower rate of return.
The main reason behind high risk in corporate bond is that there is high probability that a
company will go bankrupt than the government of United States. The risk of investment in
corporate bond is high; therefore they offer high return to investors.
The risk can be of two types namely, systematic risk and unsystematic risk. Systematic
Risk can be defined as the risk present in the whole market. Examples of systematic risk are
interest rates, recession and wars etc. Unsystematic Risk can be defined as company or industry
risk that is present in each investment. It can be decreased through diversification. Example of...