Exposure: Difference between revisions
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For example, a borrowing at the floating market rate of interest exposes the borrower to the risk of a rise in market rates. Because if the market reference rate went up before an interest resetting date, the borrower would have to pay a higher rate of interest on their borrowing. | For example, a borrowing at the floating market rate of interest exposes the borrower to the risk of a rise in market rates. Because if the market reference rate went up before an interest resetting date, the borrower would have to pay a higher rate of interest on their borrowing. | ||
== See also == | == See also == | ||
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* [[Position]] | * [[Position]] | ||
* [[Risk policy]] | * [[Risk policy]] | ||
[[Category:Manage_risks]] | |||
Revision as of 11:55, 9 October 2013
An asset, a liability, or a net position which might give rise to a loss if there were to be an adverse change in general market prices or rates, or in the credit strength of a counterparty.
For example, a borrowing at the floating market rate of interest exposes the borrower to the risk of a rise in market rates. Because if the market reference rate went up before an interest resetting date, the borrower would have to pay a higher rate of interest on their borrowing.
