Question

Note Making


Read the following passage/news story and make proper notes following the guidelines of Note making. (Source: internet, newspaperarticles)




Market risk is inevitable part of capital market. Broadly, 'MR' means changes in the market prices of underlying. In commercial business the market risk may be a consequence butin capital market it forms organiztion's core business. MR can arise in different stages of services or different timing say during an hour, a day or a week. Generally, the primaryconcern in assessing the market risk is to assess it in absolute term or relative changes in comparison of any benchmark say interest rates etc. The market risk can be broken down into different classes: such as internet risk, foreign exchange risk, commodityrisk and equity risk. Internet rate risk arises due to change in the yield curve. It affects not only current value of items of Balance Sheet of a financial institutions but also the off the Balance Sheet items. Foreign exchange risk arises on account ofchange in the price of foreign currency. Commodityrisk arises due to change in price of commodities, commodity price index etc. and Equity risk occurs when there is a fall in equity indices or most ofthe shares. Equity risk normallyresults from any unprecedented events say sovereign defaultetc.​

Answer 1

Answer:

Market risk is what happens when there is a substantial change in the particular marketplace in which a company competes. Credit risk is when companies give their customers a line of credit; also, a company's risk of not having enough funds to pay its bills