Back

G-2010-32

Dynamic Risk Management: Investment, Capital Structure, and Hedging

, , and

BibTeX reference

This paper develops a dynamic model to determine a firm's optimal risk management strategy when it faces uncertainty about its future profitability and investment opportunities. To address the complexity that results from a realistic description of the firm's environment, this article combines numerical methods and sensitivity analysis to study the optimal policies implied by the model. The interactions between financing, hedging, and investment decisions, as well as the effects of the firm's business environment on these interactions are analyzed.

, 39 pages

Research Axes

Research application

Document

G-2010-32.pdf (400 KB)