RISK CAPITAL
Economic capital set aside to cover risk related exposure and losses. It can be handled internally or with regulations. Refer to regulatory capital and risk adjusted return on capital.
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Economic capital set aside to cover risk related exposure and losses. It can be handled internally or with regulations. Refer to regulatory capital and risk adjusted return on capital.
The calibration of a firms financial andor operating risk and its economic capital to determine its ability to withstand unexpected losses. Refer to regulator capital and risk adjusted return on capital.
A broker that overcharges for trades against established rules or an advisor who makes a profit by beating their clients to an investment.
Using syndications, participations and subunderwritings to reduce a new loans or bonds risk exposure.
When an insurance firm suffers a loss that causes financial distress because the clients loss is so severe. Protection can be provided using reinsurance mechanisms and diversification. Refer to clash loss.
The redraft of existing, disparate insurance contracts into the new master policy to combine risks and losses under a concise policy. Refer to attachment method.
A company added to prevent bankruptcy by arranging securitization for the sponsor. This company must become a charitable trust that is owned by a third party. The company and sponsor share equity.
After preemptive rights are exercised by the shareholders the remaining shares are purchased in agreement with a firm by underwriters of a rights issue guaranteeing the holdings by the firm of the
Securities registered to an institution that are owned by a client eliminating the need of delivering the security to the owner.
The difference between the swap rate and the benchmark government bond rate. The wider the spread the worse the credit.
Replacing one mode of financing for another.
Expected exposure of a derivative based on the worse performance of an underlying market resource. Refer to average expected, average worst case and terminal expected risk exposures.
A firms ability to cover its debt. The better the ratio the stronger the coverage.
The difference between the eurodollar deposits and treasury bills that mature at the same time. The less the difference the more business improvement.
the sum that the insurer or its representatives are legally required to pay through legal ruling or settlement. This sum can included medical and investigative costs.
A portfolio with different maturity rates. It increases the risk exposure but also increases profit possible. Refer to gap, gapping, matched book, open book, and mismatch.
When companies that make different elements of a product join forces. This is done when one company wants to control much of the process. Refer to conglomerate and horizontal merger.
Treasury bills that are announced but not yet priced. Upon settling they will sell as any treasury bill would. Refer to to be announced and when issued security.
The probability of bankruptcy. It is based on five financial ratios.
A loss that occured already that hasnt yet been paid. Also see ratio.