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The price of CBAM certificates is linked to the price of EU allowances under the European Union Emissions Trading System introduced in 2005. [ 11 ] [ 12 ] The CBAM is designed to stem carbon leakage to countries without a carbon price , [ 13 ] and will also permit the EU to stop giving free allowances to some carbon-intensive sectors within its ...
The key variables for (credit) risk assessment are the probability of default (PD), the loss given default (LGD) and the exposure at default (EAD).The credit conversion factor calculates the amount of a free credit line and other off-balance-sheet transactions (with the exception of derivatives) to an EAD amount [2] and is an integral part in the European banking regulation since the Basel II ...
A Credit valuation adjustment (CVA), [a] in financial mathematics, is an "adjustment" to a derivative's price, as charged by a bank to a counterparty to compensate it for taking on the credit risk of that counterparty during the life of the transaction.
A carbon tariff or carbon border adjustment mechanism (CBAM) is an eco-tariff on embedded carbon. [44] In 2024 the United States said it is not a carbon tax, [45] but the World Trade Organization is dysfunctional so is unable to agree or disagree. [46] One aim to prevent carbon leakage from nations without a carbon price. [44]
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.
WAL should not be confused with the following distinct concepts: Bond duration Bond duration is the weighted-average time to receive the discounted present values of all the cash flows (including both principal and interest), while WAL is the weighted-average time to receive simply the principal payments (not including interest, and not discounting).
The consumption-based capital asset pricing model (CCAPM) is a model of the determination of expected (i.e. required) return on an investment. [1] The foundations of this concept were laid by the research of Robert Lucas (1978) and Douglas Breeden (1979).
In statistics, when performing multiple comparisons, a false positive ratio (also known as fall-out or false alarm rate [1]) is the probability of falsely rejecting the null hypothesis for a particular test.