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Foreign Exchange Risk

The risk that arises from potential fluctuations in the fair value (FV) or future cash flows of a financial instrument...

Currency Risk

The risk that arises from potential fluctuations in the fair value (FV) or future cash flows of a financial instrument...

Stub Risk

The risk that arises because of the duration of the floating leg of a swap. This occurs because once the...

Default Risk

Generally speaking, it is the possibility that firms or individuals would fail to honor their contractual obligations on their borrowed...

Cross Hedging Risk

The risk that arises in case of hedging an asset with another using futures while the two are not identical...

Bona Fide Hedge

A hedging transaction that meets a host of conditions for qualification as bona fide hedge. The transaction must (1) represent...

Horizontal Risk

The risk that arises from inability of a hedger/ portfolio manager to hedge against a change in the shape of...

Yield Curve Risk

The risk that arises from inability of a hedger/ portfolio manager to hedge against a change in the shape of...

Curve Risk

The risk that arises from inability of a hedger/ portfolio manager to hedge against a change in the shape of...

Interest Rate Risk

Generally, it is the risk that arises from changes in interest rate which impact the value of interest-bearing securities/ investments...