What are Central Counterparties (CCPs)? Central Counterparties play a critical role in clearing deals minimising the counterparty risk. The part of the central counterparty is to become the counterparty of two counterparties having a contract and become a guarantor of the deal. In practice, exchanges use central counterparties (CCPs) to clear trades between two members.

What is the Country Risk? Many significant corporations have global commercial interests and are willing to invest in multiple countries. Country risk is the risk of investing in one country by foreign residents. When a foreign investor invests in a country, factors like corruption, politics, etc., make it difficult for the investor to operate in the country. 

What is Convexity? Convexity relates to the interaction between a bond's price and its yield as it experiences changes in interest rates.

What is Clean and Dirty Price? The clean price of a coupon bond is the price before any interest payments have been made. On financial news sites, the clean price is frequently quoted. This price does not include any interest accumulated between the bond's scheduled coupon instalments. The dirty price is the polar opposite of a clean price. A dirty price is when a bond price includes interest accrued since the latest coupon payment.

What is the Basic Indicator Approach? The basic method, also known as the basic indicator approach, is a set of operational risk monitoring techniques proposed for financial institutions under Basel II capital adequacy standards. Basel II requires all financial institutions to set aside capital for operational risk.

What are Bonds with Embedded Options? A provision in financial security (usually bonds) is known as an embedded option. The bond issuer borrows money from bondholders and pays fixed payments to them for a set time at a fixed (or variable) interest rate.) The only constraint is that the possibilities cannot be mutually exclusive in this situation.

What is Advanced Measurement Approach? The Advanced Measurement Approach (AMA) is a mechanism for banks to assess and capitalize on their operational risk and is considered a model-based approach. That is a method for gathering information about the bank to self-estimate its anticipated range of operational losses and help set aside adequate capital.

  What is Delta Neutral Hedging? In finance, delta neutral refers to a portfolio of related financial assets whose value remains unaffected while the underlying security's value fluctuates somewhat.

What are Coherent Risk Measures? Cohere Risk Measures are the measures that fulfil several properties that make them coherent and reliable. These properties include

What are Spectral Risk Measures? A spectral risk measure is a risk measure that is calculated as a weighted average of outcomes, with poor results having higher weights. The quantity of the numeraire (usually a currency) to be maintained in reserve is determined by a spectral risk measure, a function of portfolio returns.

Volatility is a statistical measure of a security's or market index's return dispersion. The more the volatility, the riskier the security is in most circumstances. A "volatile" market, for example, is one in which the stock market rises and falls by more than 1% over a long time.

What is Regime Switching? Volatilities are frequently expected to fluctuate slowly when modelling data. This indicates that times of high volatility are commonly followed by periods of low volatility and vice versa.

What are External and Internal Credit Ratings? External Credit Ratings: External credit ratings improve market transparency by reducing knowledge gaps between issuers and potential investors. An external rating scale is used as an ordinal measure of risk.

What are Hazard Rates?

What is Exposure at Default, Loss Given Default and Probability of Default? Exposure at Default (EAD):

Altman's Z-Score Model is a numerical calculation that predicts whether a company will go bankrupt in the next two years. Edward Altman, an American finance professor, created the model in 1968 to measure a company's financial health.

What is an Economic Structure? The phrase "economic structure" refers to the shifting balance of output, trade, earnings, and employment across several economic sectors, ranging from primary (farming, fishing, mining, etc.) through secondary (manufacturing and construction industries) to tertiary and quaternary sectors (tourism, banking, software industries). Changes in an economic structure are an inevitable part of existence, but they pose obstacles in reallocating production factors.

Foreign Currency Defaults:  The risk of a country defaulting on its debt is one indicator of its risk. There are two sorts of sovereign debt: foreign currency debt (such as the US dollar) and domestic currency debt.

What are shares? If you want to have a cake, you can have all of it, or you can have a part of it and share the rest with others.

What Is Stagflation? Stagflation is characterised by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e., inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).