Systemic Risk
Risk that is inherent in the overall market or economy and cannot be diversified away. Systematic risk, also known as market risk or non-diversifiable risk, affects all investments and is influenced by factors such as interest rates, inflation, and economic growth
Stress testing
A risk management technique that evaluates the potential impact of adverse events or scenarios on a company’s financial condition and performance. Stress testing is used to assess resilience, identify vulnerabilities, and improve risk mitigation strategies
Standard Deviation
A statistical measure of the dispersion or variability of a set of values, such as investment returns or asset prices, around their mean or average. Standard deviation is used to assess risk and volatility and is a key input in portfolio risk management
Spot Market
A financial market where assets are bought and sold for immediate delivery and payment, as opposed to futures or forward markets where delivery and payment are made at a future date. Spot markets provide liquidity and price transparency for a wide range of assets.
Solvency
The ability of a company to meet its long-term financial obligations. Solvency is determined by comparing a company’s assets to its liabilities and is a key measure of financial stability and viability.
Short Selling
The sale of a security that is not owned by the seller, with the expectation that its price will decline, allowing the seller to buy it back at a lower price. Short selling is used by investors to profit from falling prices and can be risky if the price of the security rises instead.
Securitization
The process of pooling financial assets, such as mortgages or loans, and converting them into tradable securities. Securitization allows financial institutions to transfer credit risk and create new investment opportunities for investors.
Securities
Financial instruments that represent ownership or debt, such as stocks and bonds. Securities are bought and sold in financial markets and serve as a means for individuals and institutions to invest and raise capital.