9 Risk Analysis. You are the company accountant with a medium-sized, privately owned company. The company has surplus funds which it does not believe it will be able to invest in company operations for at least five years. The majority shareholders are also the directors of the company and they do not wish the surplus funds to be distributed as dividends. A board meeting has therefore been called to discuss the proposal that the funds be invested in a portfolio of medium to long-term securities.

Three of the directors have recently attended a short course at the local university on

‘Investment and the Management of Risk’. They make the following comments at the meeting, based on their interpretations of what they have learnt on the course: