ECONOMIC CAPITAL
Amount of capital a company has to secure in order to remain solvent. Computed internally, it is the amount of capital a firm must have to support any risks it takes or will take on. The measurement process entails converting a specified risk to the amount of capital needed to support it. Computations are based on the firm’s financial strength and expected losses.
Financial strength pertains to the probability of the company not becoming insolvent within the measurement period and the confidence level in the statistical condition. Most banks use a confidence measurement between 99.96% and 99.98%, the insolvency rate expected for an institution with a AA or Aa credit rating.
On the other hand, the expected loss refers to the expected average loss within the measurement period and represent the cost of operating business, normally fianced by operating profits.
POPULAR TERMS
Skimming
Federal Poverty Level - FPL
Hiring Freeze
Lump-Sum Payment
Announcement Date
POPULAR ARTICLE
SEE FOREX TUTORIAL
Starting Your Own Small Business: Financing a Business
Connection of Inflation and Interest Rates
Student Loans: Repayment in Times of Financial Difficulty
How Do You Intend to Live?
Digesting Financial Statements: Introduction
ECONOMIC CALENDAR
| Time | Country | Indices | Period |
|---|---|---|---|
| 05:00 | Credit Card Spending | Mar | |
| 14:30 | Industrial Product Price Index | Mar | |
| 14:30 | New Housing Price Index | Mar | |
| 14:30 | Raw Materials Price Index | Mar | |
| 16:00 | Consumer Confidence | Apr | |
| 02:30 | PMI Manufacturing | Apr | |
| 02:30 | Tertiary Industry Index | Apr | |
| 02:30 | PMI Composite | Apr | |
| 08:00 | Public Sector Net Borrowing | Mar |
