Investment risk coefficient.

Calculation formula: 1 - Self-raised funds/total investment fund sources.

The "investment risk coefficient" uses the proportion of non-self-raised funds in the total investment funding sources to reflect the risk of the developer's development capital operation, and also reflects the health and rationality of the financing structure.

The value range of the risk coefficient is (0, 1). The larger the value, the higher the investment risk.

Investment Risk Management Due to the different specific forms of corporate investment, the direct causes and specific manifestations of risks that may be encountered by each type of investment, as well as the methods of risk assessment and control, will be different.

The purpose of an enterprise's inward investment is mainly to provide necessary material conditions for production and operation in order to obtain operating income. However, due to changes in the external economic environment and internal operations of the enterprise, its operating income often fluctuates, thus causing inward investment risks.

(Also business risk).

The greater the amplitude and possibility of fluctuations in operating income, the higher the operating risk, and conversely, the lower the operating risk.

In risk-based financial management, operating risks are generally reflected through indicators such as profit before interest and tax (rate) change coefficients.

However, the author believes that it is wrong to use the operating leverage coefficient as a synonym for corporate operating risk, because from the formula for calculating the operating leverage coefficient, it can be seen that if the company maintains a fixed sales level and a fixed cost structure, no matter how high the operating leverage coefficient is,

meaningless.

Therefore, operating leverage should be viewed only as a measure of "potential risk" that is "activated" only in the presence of variability in sales and production costs.

The risk of a company's direct overseas investment mainly depends on the operating conditions and financial status of the invested company. The operating risks and financing risks of the invested company simultaneously affect the risk of the company's direct investment. Therefore, the operating risk of the invested company or

When the total risk is known, it can be approximately regarded as the direct investment risk of the enterprise.

Enterprises can also predict direct foreign investment risks by calculating indicators such as expected value, standard deviation, and coefficient of variation of investment returns based on historical data related to direct investment returns. The principle is the same as estimating indirect foreign investment risks.

Indirect external investments are mainly securities investments, and the risk they face is generally measured by the extent and possibility that the expected investment return (rate) deviates from the actual investment return (rate).

For estimating the risk of a single security investment, commonly used indicators are the standard deviation (or coefficient of change) and β coefficient of the return (rate) of the security investment. The larger the indicator value, the higher the investment risk.

When an enterprise invests in more than one investment project at the same time, this type of collection formed by two or more securities or assets forms an investment portfolio in financial economics.

The expected rate of return of a portfolio is the arithmetic mean of the various possible rates of return on the portfolio, quantitatively equal to the weighted average of the expected rates of return of the various securities that make up the portfolio, with the weights being the funds invested in the various securities

Proportion of total investment.

The risk of a portfolio is generally measured by the standard deviation of the portfolio's returns.

After research, we believe that the overall risk level of a portfolio (reflected by the portfolio standard deviation) depends on three factors: the standard deviation of each security, the correlation of each pair of securities (expressed by the covariance) and the correlation of each security

amount of investment.

As the number of securities in the portfolio increases, the role of covariance becomes larger and larger, while the role of standard deviation becomes smaller.

Therefore, when making investment portfolio decisions, the degree of correlation between the selected individual investment projects must be considered.

The capital asset pricing model proposed by Professor Sharp greatly simplifies the above-mentioned process of estimating portfolio risks and selecting effective portfolios accordingly (William F. Sharpe 1963).

The key to an investment portfolio is that investors should choose different investment projects based on expected returns and the level of risk they are willing to bear, and determine the proportion of each project.

This will be a question that needs to be addressed when making investment decisions.

This kind of decision-making is based on the correlation between investment risks and expected investment returns, with the goal of maximizing shareholder wealth, and selecting investment plans with relatively small risks and relatively high returns from alternative investment plans.

After identifying and estimating investment risks, enterprises will take the following measures to prevent and control investment risks, individually or simultaneously, based on the investment plans selected in the decision-making process and based on the risks they may face: (1) Reasonably anticipate investment benefits and strengthen investment

Feasibility study of the program.

(2) Use the leverage principle to coordinate operating risks and financing risks.

Based on the relationship between total leverage, operating leverage and financing leverage, we believe that companies with lower operating risks can use financing leverage to a certain level and adopt financing combinations with higher financing leverage, but the operating risks are very low.

Companies with high leverage should use financing leverage to a lower extent and adopt a financing portfolio with limited financing leverage to control the company's total risk.

(3) Use investment portfolio theory to carry out investment portfolio rationally.

(4) Take risk avoidance measures to avoid investment risks.

(5) Actively take other measures to control investment risks.