For example, a fund may see that there is a substantial difference between U. S. dollar debt and local currency debt of a foreign country, and enter into a series of matching trades ( including currency swaps ) to arbitrage the difference, while simultaneously entering into credit default swaps to protect against country risk and other types of specific risk.

For instance an arbitrageur would first buy a convertible bond, then sell fixed income securities or interest rate futures ( to hedge the interest rate exposure ) and buy some credit protection ( to hedge the risk of credit deterioration ).

The actual rate that borrowers and lenders receive on the market will depend on ( perceived ) credit risk, maturity and other factors.

This method, widely used in drug development, is referred to as rNPV ( risk-adjusted NPV ), and similar methods are used to incorporate credit risk in the probability model of CDS valuation.

The strong creditor protections afforded to derivatives counterparties, in combination with their complexity and lack of transparency however, can cause capital markets to underprice credit risk.

Indeed, the use of derivatives to conceal credit risk from third parties while protecting derivative counterparties contributed to the financial crisis of 2008 in the United States.

Financial risk management, an element of corporate finance, is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk.

* to calculate its credit risk.

This led to a crisis of confidence, indicated by a widening of bond yield spreads and risk insurance on credit default swaps compared to other countries, most importantly Germany.

The credit scores were also found to predict risk within each of the ethnic groups, leading the FTC to conclude that the scoring models are not solely proxies for redlining.

Risks can come from uncertainty in financial markets, project failures ( at any phase in design, development, production, or sustainment life-cycles ), legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attack from an adversary, or events of uncertain or unpredictable root-cause.

The Basel II framework breaks risks into market risk ( price risk ), credit risk and operational risk and also specifies methods for calculating capital requirements for each of these components.

In a financial institution, enterprise risk management is normally thought of as the combination of credit risk, interest rate risk or asset liability management, market risk, and operational risk.

Others such as Stanford Phelps, an early co-associate and rival at Drexel, have also contested his credit as pioneering the modern high-yield market.

The senior tranches of high-yield CDOs can thus meet the minimum credit rating requirements of pension funds and other institutional investors despite the significant risk in the original high-yield debt.

If the creditworthiness of the issuer deteriorates ( e. g. rating downgrade ) and its credit spread widens, the bond price tends to move lower, but, in many cases, the call option part of the convertible bond moves higher ( since credit spread correlates with volatility ).

Cambridge enjoys the highest possible bond credit rating, AAA, with all three Wall Street rating agencies.

A trail of credit for the understanding the three-center two-electron bond follows:

Interest rate risk refers to the risk of the market value of a bond changing in value due to changes in the structure or level of interest rates or credit spreads or risk premiums.

In 2011, Moody's Investors Service, a bond rating agency, rated $ 57 million worth of new debt in 2010 with a positive outlook and echoed their Aa2 bond credit rating for the underlying institution.

The creditworthiness of businesses is measured by bond rating services and individual's credit scores by credit bureaus.

If approval could be obtained, the bonds themselves would be counted against governmental credit limitations, or might impact the governmental body ’ s credit rating: in either instance the ability to bond for other purposes might be impaired.

* General obligation bonds promise to repay based on the full faith and credit of the issuer ; these bonds are typically considered the most secure type of municipal bond, and therefore carry the lowest interest rate.

Because longer maturity municipal bonds tend to offer significantly higher after-tax yields than corporate bonds with the same credit rating and maturity, investors in higher tax brackets may be motivated to arbitrage municipal bonds against corporate bonds using a strategy called municipal bond arbitrage.

Many larger CRAs offer " credit rating advisory services " that essentially advise an issuer on how to structure its bond offerings and SPEs so as to achieve a given credit rating for a certain debt tranche.

* MUTA is also an abbreviation in the United States Army Reserve for a " Multiple Unit Training Assembly " ( multiple refers not to multiple units but the multiple pay periods ( usually four ) for which reserve component soldiers receive credit for attending Battle Assembly )

In his Preface he refers to " Teuffel's admirable history, without which many chapters in the present work could not have attained completeness " and also gives credit to Wagner.

In Canada, a debenture refers to a secured loan instrument where security is generally over the debtor's credit, but security is not pledged to specific assets.

Inventory credit refers to the use of stock, or inventory, as collateral to raise finance.

In finance, a credit derivative refers to any one of " various instruments and techniques designed to separate and then transfer the credit risk " of the underlying loan.

CDSs are derivatives whose cost is determined using financial models and by arbitrage relationships with other credit market instruments such as loans and bonds from the same ' Reference Entity ' the CDS contract refers to.

Alternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending ( that is lending to people with relatively poor credit ) by non-bank financial institutions.

The Treasury established this account, formally known as The Account of Her Majesty's Exchequer, at the Bank of England where it remains to this day, and the legal term ' Consolidated Fund ' refers to the amount of credit held in this particular account.

A truck system, in the specific sense in which the term is used by labour historians, refers to an unpopular or even exploitative form of payment associated with small, isolated and / or rural communities, in which workers or self-employed small producers are paid in either: goods, a form of payment known as truck wages, or ; tokens, private currency or direct credit, to be used at a company store, owned by their employers.

In modern America, credit refers to a rating which indicates the likelihood a borrower will pay back his or her loan.

In credit portfolio risk modeling, granularity refers to the number of the exposures in the portfolio.

Letter of credit also refers to FIATA documents.

Underwriting refers to the process that a large financial service provider ( bank, insurer, investment house ) uses to assess the eligibility of a customer to receive their products ( equity capital, insurance, mortgage, or credit ).

Her behaviour was exemplary and Mr de Bougainville refers to it with all due credit .... His Lordship has been gracious enough to grant to this extraordinary woman a pension of two hundred livres a year to be drawn from the fund for invalid servicemen and this pension shall be payable from 1 January 1785.

An account ( in bookkeeping ) refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries.

With regard to terminology, the mortgages themselves are termed collateral, ' classes ' refers to groups of mortgages issued to borrowers of roughly similar credit worthiness, tranches are specified fractions or slices, metaphorically speaking, of a pool of mortgages and the income they produce that are combined into an individual security, while the structure is the set of rules that dictates how the income received from the collateral will be distributed.

* In relation to credit standing, the ranking of a security refers to where that particular security would stand in a wind up of the issuing company, i. e., its seniority in the company's capital structure.

In general, the term credit in the artistic or intellectual sense refers to an acknowledgement of those who contributed to a work, whether through ideas or in a more direct sense.

In the context of professional licensure, comity refers to one jurisdiction granting credit for experience earned and exams passed in a different jurisdiction.

The academics at Columbus are based on a phasing system: Phase 2 classes are for the academically challenged who require more time to absorb a given subject, Phase 3 classes are for average students, Phase 4 refers to honors classes for the academically gifted, and Phase 5 refers to Advanced Placement ( AP ) classes, which have a college-level format and where academically motivated students have the opportunity to gain college credit should they earn the proper score on the AP exam.