Pure Risk involve only a chance of loss.There is only possibility of loss but no possibility of profit.
According to Brigham and Others,” Pure risks are that offer only the prospect of a loss. Examples include the risk that a plant will be destroyed by fire or that a product liability suit will result in a large Judgment against the firm.”
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Generally a person who is doing the banking business is called banker.According to Dr.Hart, a ‘Banker’ is one who in the ordinary course.....
Tranche means an allocation of shares, typically to underwriters that are expected to sell to investors in their designated geographic markets.
A hedge is a transaction, which lowers risk. There are number of ways to design hedges for minimizing risk in banking corporations.
- Equity risk premium
Equity risk premium refers to the average annual return of the market expected by investors over and above riskless debt.
- Payback period
Payback period is length of time required for an asset to generate cash flows just enough to cover the initial outlay.
- Cost-plus loan pricing
Cost-plus loan pricing is the figuring the rate of interest on a loan by adding together all interest and noninterest costs associated with making the loan plus margins for profit and risk.
- Loan strip
Loan strip is the sale of a portion of a large loan for a short period of time, usually for a period less than the loan’s remaining time to maturity.