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Interest rate risk is the risk that arises for bond owners from fluctuating interest rates. How much interest rate risk a bond has depends on how sensitive its price is to interest rate changes in the market. The sensitivity depends on two things, the bond's time to maturity, and the coupon rate of the bond. [1]
In propositional logic, modus ponens (/ ˈ m oʊ d ə s ˈ p oʊ n ɛ n z /; MP), also known as modus ponendo ponens (from Latin 'mode that by affirming affirms'), [1] implication elimination, or affirming the antecedent, [2] is a deductive argument form and rule of inference. [3] It can be summarized as "P implies Q. P is true. Therefore, Q ...
In finance, the Vasicek model is a mathematical model describing the evolution of interest rates. It is a type of one-factor short-rate model as it describes interest rate movements as driven by only one source of market risk. The model can be used in the valuation of interest rate derivatives, and has also
Repricing risk is the risk of changes in interest rate charged (earned) at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which differ from those on offsetting assets. Repricing risk also refers to the probability that the yield curve will move in a way that influence by the ...
In propositional logic, affirming the consequent (also known as converse error, fallacy of the converse, or confusion of necessity and sufficiency) is a formal fallacy (or an invalid form of argument) that is committed when, in the context of an indicative conditional statement, it is stated that because the consequent is true, therefore the ...
The expectations hypothesis of the term structure of interest rates (whose graphical representation is known as the yield curve) is the proposition that the long-term rate is determined purely by current and future expected short-term rates, in such a way that the expected final value of wealth from investing in a sequence of short-term bonds equals the final value of wealth from investing in ...
In finance, model risk is the risk of loss resulting from using insufficiently accurate models to make decisions, originally and frequently in the context of valuing financial securities. [ 9 ]
In propositional logic, modus tollens (/ ˈ m oʊ d ə s ˈ t ɒ l ɛ n z /) (MT), also known as modus tollendo tollens (Latin for "mode that by denying denies") [2] and denying the consequent, [3] is a deductive argument form and a rule of inference.