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

First preferred stock

A type of preferred stock that has priority over other preferred issues and common stock when claiming dividends and assets.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio