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aifa030408 - Insurance Information Institute
aifa030408 - Insurance Information Institute

... • Credit Crunch: Credit is the lifeblood of the US economy, but some markets have effectively seized (at least to some degree)  Problem originated with interest rates being left too low for too long in the early 2000s  Subprime mortgage market first part of credit bubble to burst; Spread via secur ...
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Shapiro CHAPTER 5 solutionsOrig

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... well as the possibility of transferring risk to the lenders. The leverage risk usually changes over the holding period: being initially high, but subsequently diminishing due to debt redemption and increasing equity values. With knowledge of the equity betas over time, we can create a mimicking port ...
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... • This increase of more than $1 trillion/year to US  top 1% has not gone into job creation. • The most important result: since the 1970s, the  US has been an asset price bubble driven  economy (commodities, dotcoms, and housing). • The housing price bubble was the biggest and the  collapse the most  ...
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risks associated with financial instruments (glossary)
risks associated with financial instruments (glossary)

... Non-systematic risk refers to risks that can be mitigated through diversification. It is also called unique, diversifiable, firm-specific, or industryspecific risk. Investors can mitigate this type of risk by constructing portfolios in an intelligent way. The two examples below illustrate simple div ...
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... suggested that the big suppliers may become even less willing to enter into long-term PPAs under the CfD mechanism, since they will no longer be looking to purchase ROCs to manage exposures imposed by the RO. The reasons for the decline in PPA availability may include a preference for the large play ...
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... exposed to reputational risk if it is linked to a chain of transactions that result in dissatisfaction or litigation or both. Reputational risk is the current and prospective impact on earnings and capital caused by negative public opinion regarding an institution's products or activities. This risk ...
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Systemic risk

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. It can be defined as ""financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries"". It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market. It is also sometimes erroneously referred to as ""systematic risk"".
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