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Returns, Risk, and Financial Due Diligence

Christopher L. Culp

Risk Management Consulting Services, Inc.; Compass Lexecon

J.B. Heaton

Independent; Bartlit Beck Herman Palenchar & Scott LLP

July 16, 2009

FINANCE ETHICS, J. R. Boatright, ed., New York: Wiley, 2010

Financial due diligence is the process by which investors try to ascertain, among other things, the potential risks and returns of a contemplated investment. Both qualitative and quantitative methods are used to determine whether the investment offers a fair risk/return tradeoff (and what that tradeoff is). In this paper, we first review basic concepts of risk and return in financial economics with an eye toward the quantitative aspects of financial due diligence. We then illustrate the applications of these concepts in financial due diligence using the example of Bernard Madoff Investment Securities.

Number of Pages in PDF File: 22

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Date posted: August 4, 2009  

Suggested Citation

Culp, Christopher L. and Heaton, J.B., Returns, Risk, and Financial Due Diligence (July 16, 2009). FINANCE ETHICS, J. R. Boatright, ed., New York: Wiley, 2010. Available at SSRN: http://ssrn.com/abstract=1435163 or http://dx.doi.org/10.2139/ssrn.1435163

Contact Information

Christopher L. Culp (Contact Author)
Risk Management Consulting Services, Inc. ( email )
25 E Superior St
Chicago, IL 60611
United States
HOME PAGE: http://www.rmcsinc.com
Compass Lexecon ( email )
332 South Michigan Avenue
Suite 1300
Chicago, IL 60604
United States
J.B. Heaton
No Address Available
Bartlit Beck Herman Palenchar & Scott LLP ( email )
Courthouse Place
54 West Hubbard Street
Chicago, IL 60610
United States
312-494-4425 (Phone)
312-494-4440 (Fax)
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References:  11
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