Executive Summary: This report talks about a Company is called Corvette, which sells luxury sports cars in twelve months from now. There is a table shows the order of five customers and in which currencies. Using those data I will find out mean, standard deviation and some probability for analysis. In addition, these is a case involves an offer was given to Corvette by HSBC for estimating whether it is risk or not. Furthermore, we also thought about what role banks plays in the case, and analyzed the bank itself. Banks expected profit is also mentioned. Finally I used the data about my birthday graphed the two models.
Introduction: Reading through the whole report, you can …show more content…
The solution in this case is obvious and well known. The bank will insist that A must wait for the cheque to be ‘cleared’. The cheque is sent first to a clearing house and then to B’s bank.
Asset (or ‘market’) risk
Asset risk refers to the possibility that the value of a bank’s assets fall below its liabilities. (bankofengland)
This can arise from two main sources: 1) Borrowers default on their loans. The value of a loan which is in default may range from zero (if the borrower has no prospect ever of paying any interest or principal) or it may have some diminished value if the bank can eventually recover a fraction of the debt. 2) Fluctuations in market prices. Some of banks’ assets are tradable securities (e.g. government bonds, treasury bills). Since they are traded, their prices can fluctuate. Obviously, the main worry is that their value might fall.
Part4: Reducing risk for bank
The bank can save that money into central bank according to the government’s policy, and using the interest margin between the interest rate get some profit, this the safest way but its profit is the lowest. The bank also can convert some of currencies through using the gap or deviation between exchange rates among those 4 currencies. In addition, bank also can save that money until