Categories
Resources for Accountants

Value-at-Risk Explained [Video]

Value-at-Risk Explained

The 2008 financial crisis showed banks that a liquidity crisis could have catastrophic results, possibly resulting in the bank’s failure. Not surprisingly, banks now take great interest in assessing liquidity risk. One way to measure liquidity risk is value-at-risk (VaR).

VaR measures the maximum potential loss in the value of a financial instrument over a period of time (called the “VaR time horizon”) for a certain confidence level.

For example, let’s say a bank paid $940 for a corporate bond with a face value of $1,000. The value of this bond will fluctuate on a daily basis as interest rates change.

But what if you want to know the maximum loss the bank could expect to have on the bond in the next 6 months, with a 90% confidence level?

Let’s say you perform an analysis and find that the VaR for the next 6 months at a 90% confidence level is $200. This means the maximum expected loss is $200 in the next 6 months, but there is a 10% chance that the maximum loss will turn out to be higher than $200.

You can estimate the VaR using historical returns or Monte Carlo simulation.

We can apply the same concepts behind VaR to examine the effects of risk factors, such as changes in interest rates or currency exchange rates, on the bank’s economic value of equity (EVE) and net interest income (NII).
• Equity-at-risk is the maximum decrease in the bank’s EVE for a given time period and confidence interval
• Earnings-at-risk is the maximum decrease in the bank’s NII for a given time period and confidence interval
—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people.
—
SUBSCRIBE FOR FREE PDF GUIDES TO THE FINANCIAL STATEMENTS, MANAGERIAL ACCOUNTING, TAX, AND MORE
* http://eepurl.com/dIaa5z
—
HIRE MICHAEL MCLAUGHLIN, PHD, CPA
* https://michaelmclaughlin.com/hire-me
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725
* Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc
* Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
* https://www.tiktok.com/@prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
* https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
* Facebook: https://www.facebook.com/Edspira
* Instagram: https://www.instagram.com/edspiradotcom
* LinkedIn: https://www.linkedin.com/company/edspira
—
CONNECT WITH MICHAEL
* Twitter: https://www.twitter.com/Prof_McLaughlin
* LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
* https://www.edspira.com/about/

Watch/Read More
  • Tags

Most Popular Posts Today

Starting a Bank Business Tips [Video]
►
Categories
Resources for Accountants

Starting a Bank Business Tips [Video]

How to start a Bank Business; 10 essential startup ingredients. Now you can get your free business plan template gift here: https://www.bizmove.com/business-gifts.htm - This is a high quality, full blown business plan template complete with detailed instructions and all the related spreadsheets. Allows you to easily prepare a professional business plan for your new business Also get free small business guides, tools, and worksheets at: https://www.bizmove.com

Ratio Analysis (Step by Step Financial Ratios Tutorial) – Part 1 of 33 [Video]
►
Categories
Resources for Accountants

Ratio Analysis (Step by Step Financial Ratios Tutorial) - Part 1 of 33 [Video]

In this tutorial, we will learn what is Ratio Analysis along with step by step instructions to calculate financial ratios.This is the 1st Part of our most comprehensive Ratio Analysis video series comprising of 33 videos. We have attempted to go beyond the conventional jargons in this extensive guide and instead focused on practical financial statement analysis used by Investment Bankers and Equity Research Analysts. In addition, using the Colgate Case Study, we have calculated Ratios in Excel from scratch (financials from 2016 to 2020).---------------------------------------What is Ratio Analysis?---------------------------------------Ratio analysis is a type of financial statement analysis that involves quantitative interpretation of a company's financial performance in different areas. It gives insightful information on the company's profitability, solvency, operational efficiency, and liquidity positions, as reflected by financial statements.----------------------------------What you need to do?----------------------------------Step 1: Download the Colgate Excel Model Ratio Analysis Template. This template will be used for the analysis. You can download the ratio analysis template from this link - https://www.wallstreetmojo.com/ratio-analysis-template/Step 2: Please note that we are providing you with downloadable and preformatted Excel spreadsheets to assist you in understanding and applying the concepts. You will receive two templates: 1) Unsolved Colgate Model 2) Completed Colgate ModelStep 3: Start by using the “Unsolved Colgate Model Template” for analysis by following the instructions step by step.Step 4: Good Luck! :-)--------------------------------------------To know more about Ratio Analysis in Finance, you can go to this link: https://www.wallstreetmojo.com/ratio-analysis/Connect with us! Youtube https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1LinkedIn https://www.linkedin.com/company/wallstreetmojo/mycompany/ Facebook https://www.facebook.com/wallstreetmojo Instagram https://www.instagram.com/wallstreetmojoofficial/ Twitter https://twitter.com/wallstreetmojo

  • Tags

Most Popular This Week

Inspiring Short Stories | Seeking Happiness | Motivational & Inspirational Video [Video]
►
Categories
Resources for Accountants

Inspiring Short Stories | Seeking Happiness | Motivational & Inspirational Video [Video]

Seeking Happiness. Inspiring short stories. Motivational & inspirational video. Best short inspirational videos. Inspirational quotes about life and love.The motivational stories and famous anecdotes presented in this video are excerpts from our book: Top 100 motivational stories: the best inspirational short stories and anecdotes of all time. Get the book here: https://www.bizmove.com/inspiration/m9b.htm

  • Tags