The chance that one of the two parties of a transaction cannot fulfill the terms of the transaction. May lead to principal risk.
Settlement Risk
Related Terms
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A mortgage-backed security (MBS) provides investors with a monthly pro-rata distribution of any principal and interest payments made by homeowners. Types of MBS Pass-throughs In a pass-through MBS,...
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A currency forward is an agreement that locks in an exchange rate the day on which the agreement is signed for a transaction that will be completed later.
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A swap is a contract between two parties who agree to exchange cash flows based on a predetermined set of terms.
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A riskless principal is a brokerage or dealer firm that simultaneously buys and sells a security in two separate but offsetting transactions.
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U.S. Treasuries are debt securities issued by the United States Department of the Treasury to finance government spending and obligations