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At the beginning of 1998, in the United States (1997) in the European Community, regulators allowed certain large banks the discretion to calculate capital requirements for their trading books -- or market risk exposures--using internal models rather than the alternative regulatory standardized model, internal models have had certain constraints imposed on them by regulators and are subjected to back-testing verification; nevertheless, they potentially allow for ...
Financial risks in turn comprise two types of risk. Traditional banking risks including balance sheet and income statement structure, credit and solvency risks can result in loss for a bank if they are not properly managed. Treasury risks based on financial arbitrage, can result in a profit if the arbitrage is correct or a loss if it is incorrect. The main categories of treasury risk are liquidity, interest rate, currency and market (including counterparty) ...
Financial accounting and reporting is essentially a means to provide information. If information is to be useful, there must be uncertainty that can possibly be resolved by such information. To understand why accounting is useful at all, analyzing accounting information in the context of certainty would be clearly inappropriate. An information system provides signals that alter the likelihood of the occurrence of future events or states of the world that are part ...