n NISM Certifications
V-A NISM Series V-A
Medium

What is the risk known as which arises out of the mis-pricing or improper valuation of derivative contracts?

Practice question from NISM Series V A - Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Credit Risk

  2. B

    Basis Risk

  3. Model Risk

    Correct answer

  4. D

    Duration Risk

Why this is the answer

Model Risk is the risk of errors in the pricing or valuation of derivatives due to inaccurate models or assumptions used in the pricing process.

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