Herstatt risk

Definition:

The risk of loss in foreign exchange trading that one party will deliver foreign exchange but the counterparty financial-institution will fail to complete its end of the contract. This is also referred to as settlement risk.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Cumulative voting

A system of voting for directors of a corporation in which shareholder's total number of votes is equal to the number of shares held times the number of candidates.

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