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Financial risk

Index Financial risk

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. [1]

61 relations: Accounting, Asset-backed security, Beta (finance), Bid–ask spread, Bond (finance), Capital asset pricing model, Cash flow, Collection cost, Commodity, Commodity risk, Confiscation, Correlation and dependence, Cost of capital, Default (finance), Derivative (finance), Diversification (finance), Downside beta, Downside risk, Economic sanctions, Equity risk, Exchange rate, Finance, Financial audit, Financial risk management, Financial statement, Financial transaction, Foreign exchange risk, Great Recession, Harry Markowitz, Hedge (finance), Implied volatility, Index fund, Insurance, Interest, Interest rate, Interest rate risk, IT risk, Legal risk, Leverage (finance), Macro risk, Margin (finance), Modern portfolio theory, Nationalization, Optimism bias, Prepayment of loan, Reinvestment risk, Repurchase agreement, Reputational risk, Risk, Risk aversion, ..., Risk measure, Risk premium, RiskLab, Share price, Standard deviation, Systemic risk, The Journal of Finance, Upside beta, Upside risk, Value at risk, Variance. Expand index (11 more) »


Accounting or accountancy is the measurement, processing, and communication of financial information about economic entities such as businesses and corporations.

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Asset-backed security

An asset-backed security (ABS) is a security whose income payments and hence value are derived from and collateralized (or "backed") by a specified pool of underlying assets.

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Beta (finance)

In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market as a whole.

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Bid–ask spread

The bid–ask spread (also bid–offer or bid/ask and buy/sell in the case of a market maker), is the difference between the prices quoted (either by a single market maker or in a limit order book) for an immediate sale (offer) and an immediate purchase (bid) for stocks, futures contracts, options, or currency pairs.

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Bond (finance)

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.

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Capital asset pricing model

In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.

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Cash flow

A cash flow describes a real or virtual movement of money.

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Collection cost

A collection cost is the cost incurred to collect debt that is owed, a process called debt collection.

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In economics, a commodity is an economic good or service that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.

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Commodity risk

Commodity risk refers to the uncertainties of future market values and of the size of the future income, caused by the fluctuation in the prices of commodities.

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Confiscation (from the Latin confiscare "to consign to the fiscus, i.e. transfer to the treasury") is a legal form of seizure by a government or other public authority.

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Correlation and dependence

In statistics, dependence or association is any statistical relationship, whether causal or not, between two random variables or bivariate data.

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Cost of capital

In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view "the required rate of return on a portfolio company's existing securities".

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Default (finance)

In finance, default is failure to meet the legal obligations (or conditions) of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity.

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Derivative (finance)

In finance, a derivative is a contract that derives its value from the performance of an underlying entity.

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Diversification (finance)

In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk.

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Downside beta

In investing, downside beta is the element of beta that investors associate with risk in the sense of the uncertain potential for loss.

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Downside risk

Downside risk is the financial risk associated with losses.

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Economic sanctions

Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted country, group, or individual.

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Equity risk

Equity risk is "the financial risk involved in holding equity in a particular investment".

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Exchange rate

In finance, an exchange rate is the rate at which one currency will be exchanged for another.

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Finance is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty.

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Financial audit

A financial audit is conducted to provide an opinion whether "financial statements" (the information being verified) are stated in accordance with specified criteria.

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Financial risk management

Financial risk management is the practice of economic value in a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk, reputational risk, sector risk etc.

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Financial statement

Financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity.

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Financial transaction

A financial transaction is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment.

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Foreign exchange risk

Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company.

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Great Recession

The Great Recession was a period of general economic decline observed in world markets during the late 2000s and early 2010s.

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Harry Markowitz

Harry Max Markowitz (born August 24, 1927) is an American economist, and a recipient of the 1989 John von Neumann Theory Prize and the 1990 Nobel Memorial Prize in Economic Sciences.

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Hedge (finance)

A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment.

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Implied volatility

In financial mathematics, the implied volatility of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model (such as Black–Scholes) will return a theoretical value equal to the current market price of the option.

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Index fund

An index fund (also index tracker) is a mutual fund or exchange-traded fund (ETF) designed to follow certain preset rules so that the fund can a specified basket of underlying investments.

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Insurance is a means of protection from financial loss.

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Interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (i.e., the amount borrowed), at a particular rate.

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Interest rate

An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum).

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Interest rate risk

Interest rate risk is the risk that arises for bond owners from fluctuating interest rates.

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IT risk

Information technology risk, IT risk, IT-related risk, or Cyber Risk is any risk related to information technology.

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Legal risk

Basel II classified legal risk as a subset of operational risk in 2003.

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Leverage (finance)

In finance, leverage (sometimes referred to as gearing in the United Kingdom and Australia) is any technique involving the use of borrowed funds in the purchase of an asset, with the expectation that the after tax income from the asset and asset price appreciation will exceed the borrowing cost.

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Macro risk

Macro risk is financial risk that is associated with macroeconomic or political factors.

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Margin (finance)

In finance, margin is collateral that the holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty.

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Modern portfolio theory

Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.

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Nationalization (or nationalisation) is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state.

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Optimism bias

Optimism bias (also known as unrealistic or comparative optimism) is a cognitive bias that causes a person to believe that they are at a lesser risk of experiencing a negative event compared to others.

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Prepayment of loan

Prepayment is the early repayment of a loan by a borrower, in part or in full, often as a result of optional refinancing to take advantage of lower interest rates.

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Reinvestment risk

Reinvestment risk is one of the main genres of financial risk.

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Repurchase agreement

A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a transaction concluded on a deal date tD between two parties A and B: If positive interest rates are assumed, the repurchase price PF can be expected to be greater than the original sale price PN.

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Reputational risk

Reputational risk, often called reputation risk, is a risk of loss resulting from damages to a firm's reputation, in lost revenue; increased operating, capital or regulatory costs; or destruction of shareholder value, consequent to an adverse or potentially criminal event even if the company is not found guilty.

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Risk is the potential of gaining or losing something of value.

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Risk aversion

In economics and finance, risk aversion is the behavior of humans (especially consumers and investors), when exposed to uncertainty, in attempting to lower that uncertainty.

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Risk measure

In financial mathematics, a risk measure is used to determine the amount of an asset or set of assets (traditionally currency) to be kept in reserve.

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Risk premium

For an individual, a risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset in order to induce an individual to hold the risky asset rather than the risk-free asset.

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RiskLab is a laboratory that conducts research in financial risk management.

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Share price

A share price is the price of a single share of a number of saleable stocks of a company, derivative or other financial asset.

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Standard deviation

In statistics, the standard deviation (SD, also represented by the Greek letter sigma σ or the Latin letter s) is a measure that is used to quantify the amount of variation or dispersion of a set of data values.

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Systemic risk

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.

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The Journal of Finance

The Journal of Finance is a peer-reviewed academic journal published by Wiley-Blackwell on behalf of the American Finance Association.

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Upside beta

In investing, upside beta is the element of traditional beta that investors do not typically associate with the true meaning of risk.

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Upside risk

In investing, upside risk is the uncertain possibility of gain.

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Value at risk

Value at risk (VaR) is a measure of the risk of loss for investments.

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In probability theory and statistics, variance is the expectation of the squared deviation of a random variable from its mean.

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Construction Risk, Financial Risk, Financial soundness, Investment risk, Risk (finance), Risk (financial).


[1] https://en.wikipedia.org/wiki/Financial_risk

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