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Broadly, basis risk is the risk that the value of a futures contract or an over-the-counter hedge will not perfectly offset an underlying position. Other examples abound: interest futures are often ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Ratings agencies quantify the amount of credit risk associated with bonds so investors can understand exactly what they’re getting into. When an investor purchases a bond, they are essentially ...

empowering the risk management function, implementing the 3 Lines Model for clear role delineation, and defining risk tolerance levels with Key Risk Indicators (KRIs). The high-level objectives of the ...