Risk Assessment of Manufacturing and Financial Sector of Pakistan
Author: Fareeha Adil

Research in “Financial Economics” have depicted that stock prices are effected systematically by a number of macro-economic variables, namely interest rates on short term assets, general price level, economic activity level (specifically manufacturing sector), money supply and market interest rate. The stock price sensitivity to macro variables is in turn affected by firm specific micro variables (firms characteristics). This aspect establishes a link that firm characteristics not only affect risk directly but also indirectly via their influence on macro risk factors. Moreover, since the inception of CAPM (Capital asset pricing model) by Sharpe, Lintner and Markowitz who simplified the complicated problem of optimal portfolio selection by assumption that investors preferences U only depends upon first two moments μ and σ2 (mean and variance) of random liquidification value of their portfolio, the focus of financial research has been risk (the systematic risk (β), firm specific risk) and risk mitigation. The credit risk and market risks emerged on the horizon when the fragility and collapse of banking and financial sector accounted for nearly all the major economic crisis like “The Great Depression“; (Bernanke 1983); and financial crisis (2007-2009, 2011); (Gerali, Neri, Sessa & Signoretti 2010). Supervisor:- Dr. Shahid Mansoor Hashmi

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Keywords : Financial Institutions, Manufacturing, Manufacturing Sector-Pakistan, Risk Assessment
Supervisor: Shahid Mansoor Hashmi

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