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Definition of Product risk
A type of mortgage-pipeline risk that occurs when a lender has an unusual loan in production or
An equation determining aggregate output as a function of aggregate inputs such as labor and capital.
The amount of total risk that can be eliminated by diversification by
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for
risk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio.
The risk that the cash flow of an issuer will be impaired because of adverse economic
an incidental output of a joint process; it is salable,
A product that is an ancillary part of the primary production process, having
A material created incidental to a production process, which can be
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
The risk that a foreign debtor will be unable to pay its debts because of business events,
Related: Unsystematic risk
See asset-specific risk
The risk that a project will not be brought into operation successfully.
a process costing document that
The risk that the other party to an agreement will default. In an options contract, the risk
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
Financial and moral risk that an obligation will not be paid and a loss will result.
Refers to the volatility of returns on international investments caused by events associated
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
Related: unsystematic risk.
economic production run (EPR)
an estimate of the number
In project financing, the risk that the project's output will not be salable at a price that will
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
equivalent units of production (EUP)
an approximation of the number of whole units of output that could have been
The risk that the ability of an issuer to make interest and principal payments will change because
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Factor of Production
A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
The risk that the cash flow of an issuer will not be adequate to meet its financial obligations.
risk to shareholders resulting from the use of debt.
See:diversifiable risk or unsystematic risk.
Flat price risk
Taking a position either long or short that does not involve spreading.
Force majeure risk
The risk that there will be an interruption of operations for a prolonged period after a
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Related: interest rate risk
risk that arises when an issuer has policies concentrated within certain geographic areas,
grade (of product or service)
the addition or removal of product
Gross Domestic Product
Total output of final goods and services produced within a country during a year.
Gross domestic product (GDP)
The market value of goods and services produced over time including the
Gross National Product
Total output of final goods and services produced by a country's citizens during a year.
Gross national product (GNP)
Measures and economy's total income. It is equal to GDP plus the income
The risk of loss in foreign exchange trading that one party will deliver foreign exchange but the counterparty financial institution will fail to deliver its end of the contract. It is also referred to as settlement risk.
High-Risk Small Business
Firm viewed as being particularly subject to risk from an investors perspective.
Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words,
Also called purchasing-power risk, the risk that changes in the real return the investor will
The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
Interest Rate Risk
Possibility that interest rates will rise during the term of a loan thereby increasing the annual cost of borrowing.
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
A product that has the highest sales value from among a group of products
judgmental method (of risk adjustment)
an informal method of adjusting for risk that allows the decision maker
The technique of stripping all non-value-added activities from
The risk that arises from the difficulty of selling an asset. It can be thought of as the difference
Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The
risk that cannot be diversified away. Related: systematic risk
The amount of total risk that cannot be eliminated by portfolio
Economywide (macroeconomic) sources of risk that affect the overall stock market. Also called systematic risk.
The part of security's risk that cannot be eliminated by diversification. It is measured by the beta coefficient.
market risk premium
risk premium of market portfolio. Difference between market return and return on risk-free Treasury bills.
The risk associated with taking applications from prospective mortgage borrowers
National Income and Product Accounts
The national accounting system that records economic activity such as GDP and related measures.
Net Domestic Product
GDP minus depreciation.
Net National Product
GNP minus depreciation.
A general term referring to period costs, such as selling, administration and financial expenses.
risk that cannot be eliminated by diversification.
Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
operating risk (business risk)
risk in firm’s operating income.
Overnight delivery risk
A risk brought about because differences in time zones between settlement centers
Possibility of the expropriation of assets, changes in tax policy, restrictions on the exchange of
The risk that the value of a security (or a portfolio) will decline in the future. Or, a type of
Process flow production
A production configuration in which products are continually
the total units produced during a period
Any item intended for sale.
an assessment about the number of components in a product
product contribution margin
the difference between selling price and variable cost of goods sold
The cost of goods or services produced.
This is a key factor in the profit model of a business. product
a cost associated with making or acquiring inventory
The total of all costs assigned to a product, typically including direct
The time it takes to bring new and/or improved products to market.
product life cycle
a model depicting the stages through
product line margin
see segment margin
A business’s investment in technology, people and materials in order to make, buy and sell products or services to customers.
product- (or process-) level cost
a cost that is caused by the development, production, or acquisition of specific products or services
See sales mix.
the number of different types of products
An agreement by the loan purchaser to allow the monthly loan quota to be
A general term referring to indirect costs.
Production payment financing
A method of nonrecourse asset-based financing in which a specified
Production yield variance
The difference between the actual and budgeted proportions
the number of total units that could be
Output per unit of input, usually measured as output per hour of labor.
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