Which term defines the risk related to the uncertainty of an FI's earnings on its trading portfolio caused by changes, and particularly extreme changes in market conditions?
A)Interest rate risk.
B)Credit risk.
C)Sovereign risk.
D)Market risk.
E)Default risk.

Question

Quizplus · Accepted Answer

Market risk defines the risk related to the uncertainty of an FI's earnings on its trading portfolio caused by changes, and particularly extreme changes in market conditions. Interest rate risk is related to the fluctuation of interest rates, credit risk refers to potential losses from borrowers defaulting on loans, and sovereign risk is the risk of a borrower's nation defaulting on its obligations. Default risk refers to the risk of loss from a borrower defaulting on a loan or bond.

Which Term Defines the Risk Related to the Uncertainty of an FI's