How does the legal system impose risk on a derivative dealer

Reference no: EM13925668

1. Explain how closeout netting reduces the credit risk for two firms engaged in several derivatives contracts.

2. How does the legal system impose risk on a derivatives dealer?

3. Consider a firm that has assets that generate cash but which cannot be easily valued on a regular basis. What are the difficulties faced by this firm when using VAR and what alternatives would it have?

4. How is liquidity a source of risk?

Reference no: EM13925668

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How does the legal system impose risk on a derivative dealer : Explain how closeout netting reduces the credit risk for two firms engaged in several derivatives contracts. How does the legal system impose risk on a derivatives dealer?

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