liquidity option risk

liquidity option risk
The risk that actual cash flows will occur on dates or in amounts different from the contractual maturity dates and amounts. Put option risk includes the rights of saving, checking, and money market depositors to withdraw funds. It also includes the right of certificate of deposit ( CD) holders to make early withdrawals. Call option risk includes the rights of line of credit borrowers to draw down on their committed lines of credit. One of the two types of liquidity contingency risk.
See liquidity contingency risk and liquidity franchise risk. American Banker Glossary

Financial and business terms. 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • liquidity contingency risk — The risk that future events may require a materially larger amount of liquidity than the financial institution currently requires. One of the three primary components of liquidity risk along with mismatch liquidity risk and market liquidity risk …   Financial and business terms

  • liquidity franchise risk — The risk arising from the implied obligation of a bank to continue making new loans or other new business related cash flows in order to preserve its business franchise even though it may be having funding difficulties. One of two types of… …   Financial and business terms

  • liquidity-implied option risk — See liquidity franchise risk …   Financial and business terms

  • Risk-free interest rate — The risk free interest rate is the interest rate that it is assumed can be obtained by investing in financial instruments with no default risk. However, the financial instrument can carry other types of risk, e.g. market risk (the risk of changes …   Wikipedia

  • Interest rate risk — is the risk (variability in value) borne by an interest bearing asset, such as a loan or a bond, due to variability of interest rates. In general, as rates rise, the price of a fixed rate bond will fall, and vice versa. Interest rate risk is… …   Wikipedia

  • Principal at risk notes — What are Principal at Risk Notes? Ending Value Higher Benefits of PARs * Enhanced/Leveraged Return ** Upside: Receive a return that is enhanced by leverage so that it will be higher than the actually return, subject to any caps. ** Downside:… …   Wikipedia

  • Rainbow option — (or basket option) is a derivative exposed to two or more sources of uncertainty, as opposed to a simple option that is exposed to one source of uncertainty, such as the price of underlying asset. Rainbow options are usually calls or puts on the… …   Wikipedia

  • Corporate bond — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal …   Wikipedia

  • ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… …   Encyclopedia of Judaism

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”