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Extreme Value Theory
Extreme value theory (EVT) is a branch of applied statistics developed to address problems associated with extreme outcomes.
Markowitz Efficient Frontier
The Markowitz efficient frontier set is a mathematical concept that depicts the portfolios that produce the highest predicted return.
Translation Risk
Translation Risk refer to the risk when the cash flow of one currency must be exchanged for a future date to settle a specific transaction.
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Capital Conservation Buffer
The capital conservation buffer (CCB) is meant to protect banks in times of financial distress. It is in keeping with the rationale
Transaction Risk
Transaction Risk refer to the risk when the cash flow of one currency must be exchanged for another at a future date to settle a transaction.
What is Stress Testing?
Stress testing is a type of scenario analysis that looks at a financial outcome based on a specific “stress” placed on an entity.
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Bull and Bear Spread
Bull and Bear spread are two common hedging strategies.
Continental Illinois
Continental Illinois was at one time the largest bank in Chicago which aggressively pursued both commercial and industrial loans.
Risk Aggregation
In order to determine the total enterprise risk for a financial institution, all risks must be aggregated and analyzed
What is Potential Future Exposure?
Potential Future Exposure is actually derived from MTM and revaluing the portfolio and considered an estimate of MTM, but at a specific point in future
Backtesting VaR
Backtesting attempts to verify whether actual losses are reasonably consistent with projected losses.It compares value at risk forecasts.
What is Sovereign Risk?
Sovereign Risk is the risk that the country will default on its financial obligations.