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imported>Doug Williamson |
imported>Doug Williamson |
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| Price risk is the risk that the value of an investment that you own will fall.
| | A firm or other market participant which is unable to influence price. |
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| This risk illustrates how risks interact, as price risk could be caused by some or all of:
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| * Interest rate risk – interest rate fluctuations affect the value of instruments which pay fixed interest.
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| * Credit risk – the asset is worth less because the issuer’s credit standing has weakened.
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| * Market liquidity risk – the market is only willing to buy the asset at a lower price (if at all).
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| Price risk shows how risks can be bundled up into a single term in some applications, and how important it is that the treasurer understands how risks originate.
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| Although a single term can be useful when considering an asset or liability class, it can also confuse.
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| The terminology tends to be driven by symptoms rather than causes, and a risk management strategy should really be driven by the causes.
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| == See also == | | == See also == |
| * [[Interest rate risk]] | | * [[Perfect competition]] |
| * [[Credit risk]] | | * [[Price maker]] |
| * [[Market price risk]]
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| * [[Financial market price risk]]
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| [[Category:Financial_risk_management]]
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Revision as of 19:09, 10 August 2016
A firm or other market participant which is unable to influence price.
See also
