Legal Dictionary

Search results for: “financial risk”

  • Reverse Price Risk

    A type of mortgage-pipeline risk that occurs when a lender commits to sell loans to an investor at rates prevailing at application but sets the note rates when the borrowers close. The lender is thus exposed to the risk of falling rates….

  • Residual Risk

    Related: unsystematic risk…

  • Reinvestment Risk

    The risk that proceeds received in the future will have to be reinvested at a lower potential interest rate….

  • Regulatory Pricing Risk

    Risk that arises when regulators restrict the premium rates that insurance companies can charge….

  • Rate Risk

    In banking, the risk that profits may decline or losses occur because a rise in interest rates forces up the cost of funding fixed-rate loans or other fixed-rate assets….

  • Purchasing-Power Risk

    Related: inflation risk…

  • Product Risk

    A type of mortgage-pipeline risk that occurs when a lender has an unusual loan in production or inventory but does not have a sale commitment at a prearranged price….

  • Price Risk

    The risk that the value of a security (or a portfolio) will decline in the future. Or, a type of mortgage-pipeline risk created in the production segment when loan terms are set for the borrower in advance of terms being set for secondary market sale. If the general level of rates rises during […]

  • Overnight Delivery Risk

    A risk brought about because differences in time zones between settlement centers require that payment or delivery on one side of a transaction be made without knowing until the next day whether the funds have been received in an account on the other side. Particularly apparent where delivery […]

  • Operating Risk

    The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk….

  • Nonsystematic Risk

    Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk or diversifiable risk. Systematic risk refers to risk factors common to the entire economy….

  • Nondiversifiable Risk

    Risk that cannot be eliminated by diversification….

  • Mortgage-Pipeline Risk

    The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period….

  • Market Price Of Risk

    A measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio….

  • Market Risk

    Risk that cannot be diversified away. Related: systematic risk…