1_introduction - INTRODUCTION types of risks hedging...

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INTRODUCTION J. Wei, Department of Management, U of T 1 MGTD78 types of risks hedging decisions types of hedging products
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TYPES OF RISKS J. Wei, Department of Management, U of T 2 MGTD78 Market Risk risks arising from trading activities exposures to interest rates, FX rates, equity prices, commodity prices and other market variables managers should worry about the aggregated residual market risk (e.g., long and short may cancel) management: diversification (e.g., holding different bonds) and hedging Credit Risk risks arising from potential counterparty’s default management: diversification (e.g., loan portfolio) and hedging (credit derivatives)
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TYPES OF RISKS J. Wei, Department of Management, U of T 3 MGTD78 Operational Risk risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events (Basel Committee, 2001) examples: internal fraud external fraud employee practice, etc management: capital reserve, prudence, monitoring, insurance
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This note was uploaded on 05/10/2011 for the course MGT D78 taught by Professor Wei during the Spring '11 term at University of Toronto- Toronto.

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1_introduction - INTRODUCTION types of risks hedging...

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