Currency swaps were originally conceived as a way to avoid the foreign exchange transaction costs that were associated with international trade. By using an intervening currency, parties would be able to reduce these costs and improve their terms of trade by locking in a favorable rate for future transactions. Today, …

If you are looking to manage your portfolio’s risk-return profile, why not join the growing number of investors who have been using structured notes? Structured notes can be a great addition to your investment portfolio, allowing you to gain exposure to a desired market or index at an effective cost, …

Interest rates are often subject to fluctuations, which can be either upward or downward. When a bank sets an interest rate floor for their customers, it means that the banks will not allow the customer’s interest rates to change below a certain level. This protects the lender in case of …

Investing in foreign assets can be a good way to diversify your investment portfolio. But you must first understand the risks involved before diving in head-first. You can make more money by investing in foreign assets, but you could also lose big if the values of the foreign currencies go …

When it comes to bond futures contracts, there is a fairly obscure little secret that savvy traders know about. This secret allows those who are aware of it to cash in on the difference between what they need to pay for their bond and what they receive upon delivery. It’s …

Governments use bonds to raise money for various reasons. These may include paying off debts, building infrastructure (such as roads, bridges, railways), or running national programs like social security and medicare. Governments also issue bonds when they want to borrow large sums of money in order to pay for wars …

Credit Value at Risk (cVAR) is a measure of the potential economic loss on credit exposures due to credit events. Credit Value at Risk may be calculated for individual assets, portfolios, or even institutions. It can be expressed in absolute terms, such as Euros or Dollars, or as a percentage …

If you want to invest in something, you should not only think about the rate of return. It is better to also think about the risk. The risk can be high or low. It refers to how different an asset’s or security’s financial performance will be than what is expected. …

In the hedge fund industry, return over maximum drawdown is the best measure of how well the fund manager has managed risks. It measures the average return of a portfolio over its worst loss, or “maximum drawdown.” This is a relatively new indicator for managers to track and compare since …

The Tail Value at Risk (TVaR) is a financial measure of a potential loss in a portfolio. Tail Value at risk uses the same statistical principles as the traditional value at risk with the only difference being that it measures an expectation of the remaining potential loss given a probability …