Purchase Solution

Liquidity risk and Option pricing theory

Not what you're looking for?

Ask Custom Question

Explain these financial theories.

Liquidity risk and Option pricing theory.

Purchase this Solution

Solution Summary

Liquidity risk and Option pricing theory are featured topics.

Solution Preview

Liquidity risk

Liquidity risk simply represents the potential that an institution will be unable to meet its obligations as they come due because of the inability to liquidate assets or obtain adequate funding or that it cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions. This risk also tends to compound other risks. For example if an organization has a position in an illiquid asset, its limited ability to liquidate that position at short notice will compound its market risk. So liquidity risk has to be managed in addition to market, credit and other risks. There are no comprehensive measures of liquidity risk. However there are certain techniques of asset-liability management ...

Solution provided by:
Education
  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
Recent Feedback
  • "Thanks"
  • "Thanks"
  • "This is a great help...Thank you"
  • "Thanks for the advice!"
  • "Oh my gosh u are awesome... A++"
Purchase this Solution


Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.