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By: Bhuwan Prasad Wagle

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Presentation on theme: "By: Bhuwan Prasad Wagle"— Presentation transcript:

1 By: Bhuwan Prasad Wagle
MARKET RISK By: Bhuwan Prasad Wagle

2 Market Risk Risk of losses in on and off-balance sheet positions
Resulting from movement in market prices Both implicit and explicit The market risk can be broadly recognized as: Interest Rate Risk Foreign Exchange Rate Risk

3 Interest Rate Risk Negative effect caused by interest changes
Changes in interest rate affects a bank’s earning by: Changing net interest income Changing the level of other interest sensitive income Changing income Affects the underlying value of bank assets, liabilities and off-balance sheet item Arises when there is mismatch between the positions

4 Foreign Exchange Rate Risk
Negative effect caused by interest changes

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