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
- Fidelity bond
Fidelity bond is an insurance policy that reimburses an employer for financial loss resulting ... - Convertible currency
Convertible currency refers to a currency that can be exchanged freely for any other currency ... - Taylor rule
Taylor rule means Economist John Taylor’s monetary policy rule that explains how the ... - Aggregate deductible
Deductible in some property and health insurance contracts in which all covered losses ... - Bank run
Bank run is a financial panicking, in which all depositors attempt to withdraw all ...