Danyell Llanos

What is counterparty risk and what is done after the calculation of counterparty risks?

Asked by Danyell Llanos 10 months ago counterparty


Danyell Llanos
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Counterparty risk refers to the risk to the parties involved in a contract when a counterparty will not be able to meet the terms and agreements of the contract. When this happens, the agreed upon terms and payments might not be carried out according to the original terms.  

Counterparty risk can be determined by rating agencies which classify bonds and give ratings based on books and records of companies. Credit reports are also assessed to determine counterparty risk. A low rating could mean that counterparty risk is high, and the other party could be given a premium. For example, a company given a low rating might have to shoulder paying off a bigger interest rate to the lender.  

Counterparty risk must be calculated in order to minimize great losses in case a party defaults. It helps to know a lot of information on how financial markets work in order to make sound financial decisions. Getting Commodity Derivatives Training from fmarketstraining.com will help equip you with the right tools and knowledge.

by Danyell Llanos 10 months ago

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What is counterparty risk and what is done after the calculation of counterparty risks?

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