Finance the handbook of risk

The Handbook of Risk

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Finance series contains bookswritten specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more. For a list of available titles, please visit our Web site at www.WileyFinance.com.

TheINVESTMENT MANAGEMENT CONSULTANTS ASSOCIATION (IMCA) is a nonprofit organization with members in the United States, Canada, Britain, Asia, and Australia that promotes education, ethics, and standards for the investment consulting profession. The association’s 5,000 members benefit from peer networking opportunities, information sharing, and cutting-edge forums on risk management, portfolioconstruction, and practice management. IMCA’s Certified Investment Management Analyst designation assures clients of a consultant’s expertise and commitment to professional ethics. IMCA Practice Standards, Performance Reporting Standards, and Questionnaires for Investment Managers offer practical guidelines to members seeking to enhance their client relationships. The semiannual Journal of InvestmentConsulting publishes original research and in-depth articles on investment theory and practice, and The Monitor, a bimonthly membership publication, informs members of the latest news on industry trends and investment strategies. IMCA also publishes regular updates on important legislation and regulatory developments in Washington, D.C., and the fifty states through the association’s Legislative Network.The Handbook of Risk

Edited by Ben Warwick

John Wiley & Sons, Inc.

Copyright © 2003 by IMCA. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording,scanning or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-750-4470, or on the web at www.copyright.com. Requests to thePublisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-7486008, e-mail: permcoordinator@wiley.com. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy orcompleteness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publishernor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at 800-762-2974, outside the United States at 317-572-3993 or fax 317-572-4002....