You specify that these methods are used by banks (Basel III). But can the methods of risk management also be implemented in for example an airline company (Like; Delta or Emirates), whom also depend heavily on liquidity?
hello i need some help i am looking at polymetal international plc company on yahoo finance and have found the bid and offer price but i am not sure where to find the number of shares in order to work out the cost of liquidation could you please help me?
It assumes as if the fair price is the mid price, i.e. you could have bought/sold at mid price but because of the spread you can only buy/sell at the ask/bid price. The additional cost is the difference between the mid and bid/ask prices.
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You specify that these methods are used by banks (Basel III). But can the methods of risk management also be implemented in for example an airline company (Like; Delta or Emirates), whom also depend heavily on liquidity?
Very correct. The reference chapter mostly focuses on the banking sector, but the same concepts can be used in most industries.
hello i need some help i am looking at polymetal international plc company on yahoo finance and have found the bid and offer price but i am not sure where to find the number of shares in order to work out the cost of liquidation could you please help me?
Hi James. Could you please explain why the cost of liquidation is divided by 2? Can't wrap my head around it.
Thanks :)
It assumes as if the fair price is the mid price, i.e. you could have bought/sold at mid price but because of the spread you can only buy/sell at the ask/bid price. The additional cost is the difference between the mid and bid/ask prices.
Thank you Professor James for the great video and explanation. I am now one of the FRM.
Glad it was helpful! If you like our video lessons, it would be appreciated if you could take 2 minutes of your time to leave us a review here: trustpilot.com/review/analystprep.com
A great explanation of Liquidity Risk! Many thanks, Professor James.
Very welcome!