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Mastering Investment Banking Securities by Natasha Kozul

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18

Market risk on derivatives

Balance sheet vs. off-balance sheet instruments

Market risk on specific financial instruments

Market risk management

Market risk management best practice guidelines

Value at risk (VAR)

INTRODUCTION

Market risk is the potential loss on investment due to fluctuations in the market value of assets involved. Specifically, for derivatives products it is the negative impact that the fluctuations in the underlying security market value would have on the value of the derivative. The uncertainty is implicit in all derivative securities. It is the driving force behind their trading and development. However, some of the risk associated with it can be diversified away or hedged. The remaining factors that could potentially ...

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