The liquidity gap risk
is also falling in CC T as the hard-bullet bonds (50% of the total) mature over time and because all bonds issued after March 2014 have an extendible maturity feature that mitigates refinancing risk.
"This leverage created a 'gap risk
' that the market value of Deutsche Bank's protection could at some point exceed the available collateral, and the sellers could decide to unwind the trade rather than post additional collateral in that scenario."
"With the broader and larger investor base that is caused by the MSCI upgrade, equities in the UAE and Qatar are likely to see greater average daily trading volumes, decreased average volatility, decreased gap risk
, more resilience to internal and external shocks or black swan events and greater transparency.
Figure 1 shows the situation in which gap risk
happens between two adjustment points [t.sub.k] and [t.sub.k+1] possibly because risky assets value falls sharply before CPPI investors rebalance assets.
And that investment is coming in to take that gap risk
Key to this success is developing transparency across these risk buckets to enhance communication and minimise potential gap risk
from falling through the cracks.
Thus, to the extent that the mezzanine lender is amenable to accepting a policy with an effective date prior to the making of its loan (and with the attendant gap risk
for matters arising in the interim), that option is available and the cost would be for the endorsement only, as the policy would have been previously issued and paid for.
Passengers who aren't mindful about the gap risk
harmful or even lethal consequences.
Models are almost inevitably less volatile than reality because it is difficult to factor in gap risk
and behavioral response.
The digital gap risks
becoming a chasm with AI set to transform the face of UK businesses.
This is because market moves are generally without the gap risks
thatare present in some other markets.