What is Market Risk Capital?
Market Risk Capital Capital that financial institutions must hold to cover potential losses arising from market risk, such as changes in interest rates, FX rates, or equity prices.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Market Risk Capital” Used in Practice?
Market risk capital is determined by stress testing portfolios against extreme market movements in interest rates, FX, or equity prices.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Market Risk Capital?
Capital that financial institutions must hold to cover potential losses arising from market risk, such as changes in interest rates, FX rates, or equity prices.
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