Financial glossary

C

Commodities

A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods. Examples include gold, oil, wheat

 

Counterparty risk

Counterparty risk refers to the risk that a counterparty of a financial transaction will not honour its contractual obligation. For a counterparty of an OTC transaction who is recording a gain (positive market value of the OTC transaction in its book), this represents the risk that the other counterparty defaults before the transaction matures.

Credit spread

A credit spread measures the credit risk premium of a debt issuer:

  • It is the spread over the risk-free rate that investors require to purchase a bond (see Z-spread).
  • Alternatively, it is the premium required by CDS sellers of protection to bear the credit risk on the reference entity.

Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Asset Management Holding.