Market Risk
The risk incurred by the FIs (Financial institutions) in the trading of assets and liabilities due to changes in interest rates, exchange rates and other assets prices.
Market risk arises when a FI takes a buy or sell position of bonds, equities, commodities or derivatives in the market. Normally in recent times FIs specially banking firms are heavily engaged in the trading of securities in the market. Therefore if the FIs takes buy or sell decision of such assets, the prices of these securities could be affected by the change interest rate.
Category: Banking & Finance
Previous: ← Duration
Next: Credit Risk →
More from this Section
- Non-Deliverable Forward Contracts
A new type of forward contract called a Non deliverable forward contracts (NDF) is frequently ... - Agency offices
Agency offices is the International banking offices that provide credit and other nondeposit ... - Money Market Hedge
Money Market Hedge refers to use of foreign currency borrowing to reduce transaction or ... - Variable Expenses
Variable Expenses Costs of doing business that vary with the volume of business, such ... - Conflicts of interest
Conflicts of interest is a manifestation of the moral hazard problem, particularly when ...