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What is a credit risk when entering into a derivative contract?
Credit Risk. Credit risk or default risk evolves from the possibility that one of the parties to a derivative contract will not satisfy its financial obligations under the derivative contract.
What are the sources of office employees?
Companies get office employees from different sources. Some contract with temp agencies to supply employees. Others hire employees directly from the classifieds.
What is a commodity option trading system?
In commodity option trading each contract will have a different implied volatility. Traders in commodity options have a different perception of risk in that it is bi-directional.
What is the counterparty risk in a futures contract?
Counterparty risk is the risk that your counterparty will not be able to honour the agreement. If it is an OTC future, you must assess the ability to fulfil the futures contract, whereas if you trade it on exchange, the exchange will guarantee fulfilment.
Does a premium have to be paid to To obtain a contract of insurance against a risk?
Nothing is obtainable free in this world. So, obviously you are to pay premium for obtaining a contract of insurance against a risk
What is risk acceptance matrix?
It's a set of rules that defines the acceptable risk of engaging in a contract with a customer .
The probability of the contractor failing to meet the requirements of the potential contract is considered to be what type of risk?
Technical risk.
What is a risk acceptance matrix?
It's a set of rules that defines the acceptable risk of engaging in a contract with a customer .
What is a basic risk when entering into a derivative contract?
Basis Risk. This is the spot (cash) price of the underlying asset being hedged, less the price of the derivative contract used to hedge the asset.
What is the passing of the risk in a contract of sale and discuss the rules outlining it?
Passing of risk refers to the obligation to protect the goods under contract until the event defined. For example, "free on board" (FOB) contracts transfer ownership and risk to the buyer from the moment the goods are loaded for shipment. In many cases, absent a specific contract term to the contrary, the risk of loss passes from the seller to the buyer when the carrier offers the goods at the buyer's destination. The party holding the risk is the one who should be responsible for insurance to cover the loss or damage to the goods. The other party may be asked to PAY for the insurance, but the loss would only be compensated to the person holding the risk.
Why different sources of finance is needed for capital expenditure?
Different sources of capital has different percentage of interest amount payable so optimum capital mixture required to finance business.Due to high risk and high interest rate associated with different source of financing so optimum capital structure is required to get maximum benefit.
Do any types of contracts or contract situations increase risk?
Yes, there are types of contracts that are more risky. A time and material's contract has the least risk for the seller. A fixed fee contract can be very risky for the seller, but also has some downsides to the buyer.
