Currency risk is the risk of losses arising from adverse changes in currency exchange rates. Currency risk arises from the need to convert one currency into another currency in order to settle a transaction. For example, a U.S. company that exports goods to a customer in Japan will incur currency risk if the value of … Read more
A specific stock is risky right now due to idiosyncratic risk. Which is the closest synonym for the word idiosyncratic? There is no single word that is a perfect synonym for “idiosyncratic,” but some close options include “unpredictable,” “unusual,” “unconventional,” and “individual.” Is idiosyncratic risk priced? There is no definitive answer to this question, as … Read more
Liability management is the proactive identification, assessment, and mitigation of risks that could potentially result in liability for an organization. In the context of risk management, liability refers to the potential financial or legal repercussions that could arise from any actions or inaction on the part of the organization. Organizations face a variety of risks … Read more
The term “counterparty risk” is used to describe the risk that a counterparty to a financial contract will not fulfill its obligations under the contract. This risk is prevalent in the credit card industry, where cardholders are typically unaware of the counterparty risk involved in their cardholder agreements. When a cardholder agrees to a credit … Read more
Portfolio Variance Definition: Portfolio variance is a measure of the dispersion of returns for a portfolio of investments. The higher the portfolio variance, the greater the risk associated with the portfolio. Formula: Portfolio variance is calculated as the sum of the variances of the individual investment returns, weighted by the fraction of the portfolio invested … Read more
Risk: What It Means for Investing, How to Measure and Manage It What are the 4 types of risk? There are four primary types of risk: strategic risk, compliance risk, operational risk, and reputational risk. Each type of risk poses a unique challenge to businesses and must be managed in its own way. Strategic risk … Read more
