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    Mircea Merticariu
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    The Risks Management of the Capital Market-1

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    The Risks Management of the Capital Market-1

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    2K views4 pages

    The Risks Management of The Capital Market-1

    Uploaded by

    Mircea Merticariu
    The Risks Management of the Capital Market-1

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 4
    —— Ell Jems, ‘on Manufacturing System ia2iin) ‘THE RI § MANAGEMENT OF THE CAPITAL MARKET Costel CEOCEA Abarat: The participans al the invexment processes all agree tht risk cant be completely elaningied ond woiritaia beled sich a manner thot the nogtve el are es and les. nom erronment the rik wey ae ns the whole conbinton of srg, proces: insure ond adequate model whch Telp the sition Yo contro the risk in a great manner Key words risk management capital marker 1, CAPITAL MARKET'S RISK ~ AN AGGREGATED RISK ‘Any market is characterized as an assembly of sys ematc relations, organized around the property. Because these relations have a permaneat character, they are more ‘or less sperialized and they are created between buyers nd sellers, jnterrelated in terms of transaction price ‘The market's sk describes itself as an aggregated risk, 1aving both systematic and unsystematic risks. The ‘next diagram shows the classification of the capital mar- 1.1. Price rik “Te contra clement inside she unsystematic sks category isthe price risk The ek of price Toss resis 1m the ic tha price variations brings tosses tothe transfer~ tie securities ansactions participants: when the price foes up, there afe Losses forthe long position’s investors, shen the price go low, there are losses For the short posi- Son's investors "The price's main advantage is that it can easily be recognized because he appears directly on the market On the market, the price has the following forms: open. Close, maximlr, minkmuen, average, target price, spot market price ofthe basi commodity or futures price, or derivatives exercise price. ‘Verifying the actual operation conditions of an eff cient market theory, based on a continuous Brown movement, the prices are following a directional, deter Inited evolution, forecasted to be carying though time {Gait rate) and & temporary Actuation rate (variance, ‘which suffered consolidations and regains following the ‘ata nw of distribution. Price's negative effects can be counteracted ina rele ‘van measure by using she derivatives sratesies “The fuctuation risk of the basis price 'As part of the price risk thee isthe basis risk, whieh ism specific risk forthe derivatives and it expresses the difference between the security's spot price and fuures rice, Tough the two prices move inthe sume direction, the difference between them is the time period to mtr ity forthe derivative contacts and the delivery, sorage and payment conditions on the spot market Athi ese, the imporance of volatility knowledge increases; this indicator shows how moch the pive of an element can fluctuate wards a basis in a tine period, finder normal circumstances. The volatility risk Fests n the fact that, at some point, the securities peice uct tion can exeeed the investors" expectations becuse of the changes that take place on the elements that deter tn the size of the fndividual price ar he basis vice Referring to lhe derivatives contacts (wes an! wp tions) the open price for position 4s chosen by the i eslrs sosording to his forecast and nerest and it 6 SSEa7—_—_ toi ce : while ioe eof eh of investor 1S ‘entitled 19 ani ee ‘the spot price and the bass Pe oe indicator"s SZ The som ary of ce rn er reais (srapening) We 2. APPLICABLE PROCEDURES IN MARKET AIsK MANAGEMENT vet ik management sels down HRS wt i ean he es he eins roa recast ora # pti te of mare’ iu. The cal mathe i deere seco dens o te grits sea? ee Sy perm preservation funtion fr the Po Neer oor ang tls, anon he mses see ema anaes ei postion represen tbe taper aspects te erasaton’s rie andthe it order ad the sop 0F- olo’s statexies Zea eto ee ‘port ievel represents the inoment when the offer if 260, ein emesis NS ee are accel a "Acne oe ins ‘point when the demand becomes zero, the commodities ful en's i holly 0 Sioa cachernot cles Gall ce re ‘Market's participants have three goals according 10 Ses : x or hedging, when 0 minimize pee ee "Signo —wbitrage, when, from 8 neutral position towards the eee eee neat sion when ty cat 84 SPEED 2 pox a main advantages {om the price det 10 08 . i movement: sysideration the feet thal the access po Taking ito OR financial information is optimized steal and #° ron ee recline nda ivi, Scan ee 2 chal a Fey nso Win ae for ani rt posi synchronization witty wn ft a deere eso cc enn ee (ep = te ey aves aac on ty 2 combing sti can ew oe coins vty fe oe oie 901 denn ei en fore: transactions, depending on your Hs eno cries bone te eet toed hoes ‘opening posito the lasses case suchas: : othe opening performance tisk in 8 sesuty’s long poston soured op wrt he posi cat de price Pestaes and as a esse-to-case resolution, the investor fan counteract the effect through # selling stop order or 9 opening along put position with options or rading ‘hnultaneously a put contract (adjoint put) “when opering a short sale, the trader's risk isthe price? mperessing and he can restrict the loss by 2 stop ter or fong call option; ~ im along forward positon, the contracts perform ance risk s ianaged by a short futures coniriet oF 8 long sal option, ~in a short forward position, the contract's perform: ance risk is managed by a long futures contractor & shor call option; the furures contracts can be covered only incase of

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