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   Funding Risk
   















 

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Funding Risk

The potential for unanticipated costs or losses due to a mismatch between asset yields and liability funding costs. The risk may be due to different maturities of assets and liabilities, changes in credit quality, or a variety of other causes. In addition to these basis-type risks, funding risk can take the form of liability to meet cash or collateral requirements, forcing premature liquidation of a position.

For a regulatory discussion on the various aspects of liquidity risk, see "Key Risk Concepts: Other Risks."

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