Basis risk is considered a systematic, or market, risk. Systematic risk is the risk arising from the inherent uncertainty of the markets. Unsystematic, or non-systematic, risk, which is the risk associated with a specific investment. The risk of a general economic turndown, or depression, is ...
A basis point is one hundredth of a percentage point, or 0.01%. It is used to discuss small fluctuations in equity indexes, interest rates, and yields on fixed annuities. Many financial analysts work with basis points, and you may also hear them referred to in news broadcasts about financia...
What is a risk premium and who might take advantage of it? What are the sources of risk? Which can be eliminated and how? What is the risk on different financial assets and what is affecting their risk? What is the difference between market risk and idiosyncratic risk?
What is a key risk indictor (KRI)? A key risk indicator (KRI) is a metric for measuring the likelihood that the combined probability of an event and its consequences will exceed the organization'srisk appetiteand have a profoundly negative impact on an organization's ability to be successful....
and ETFs seem so similar is that, when ETFs were designed a few decades ago, they were based on traditional mutual funds. Like mutual funds, ETFs invest in a portfolio of underlying securities, charge management fees, and allow investors to buy and redeem their shares on a regular basis. ...
Choosing a proper risk measure is of great regulatory importance, as ex- emplified in Basel Accord that uses Value-at-Risk (VaR) in combination with scenario analysis as a preferred risk measure. The main motivation of this pa- per is to investigate whether VaR, in combination with scenario...
Change is constant. Just because a risk control plan made sense last year doesn’t mean it will next year. In addition to the above points, a good risk management strategy involves not only developing plans based on potential risk scenarios but also evaluating those plans on a regular basis....
Business risk is anything that could expose your company to financial loss or failure. Here are seven ways to minimize your business risk.
A basis rate swap is a type of agreement in which two parties swap variable interest rates in order to protect themselves against interest rate risk.
Futuresare a type of financial asset known as aderivativewhose value is linked to an underlying asset. The underlying asset can be a commodity or a financial instrument. Buyers and sellers of futures contracts use them to hedgeprice riskor to trade speculatively. The intention behind a basis qu...