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Fuel Hedging and Risk Management
Published in Bijan Vasigh, Ken Fleming, Liam Mackay, Foundations of Airline Finance, 2018
Bijan Vasigh, Ken Fleming, Liam Mackay
Accounting for hedging gains and losses without hedge accounting is a bit more difficult since the realized portion of the airline’s fuel hedge portfolio needs to be accounted for, but also the unrealized hedging gain/loss of hedging contracts that have not yet been settled. In essence, the gain or loss of all future hedging contracts needs to also be shown on the income statement. The unrealized hedge gain or loss represents the mark-to-market change in the fair value of the hedging portfolio. As a result of changes in the price of the underlying commodity (i.e. crude oil), the unrealized hedge gain/loss can experience significant swings in value, which are ultimately going to be reflected on the income statement.
Design and Implementation of an Enterprise Credit Risk Assessment Model Based on Improved Fuzzy Neural Network
Published in Applied Artificial Intelligence, 2023
Literature (Bauman and Shaw 2018) proposes a Credit Metrics model to measure credit risk, which is a credit risk management model based on the VaR method, which estimates the credit risk VaR of individual securities and investment portfolios on a mark-to-market basis, fully considering Credit rating ups and downs and default events also take into account that the portfolio can play a role in diversifying risk, which is a good complement to the Basel Accord, because it recognizes the diversification effect of credit risk when assessing the market value of assets. Significance. The basic idea of this model is to calculate the default probability of certain loans based on the credit rating, and at the same time, it can calculate the probability that the above-mentioned loans will be transformed into bad debts. model to manage credit risk becomes possible. Since commercial bank loans cannot be publicly traded directly, it is difficult to obtain the market value of the loan, and the volatility of the loan value cannot be observed. The probability of change, the rate of return of the loan, etc. are used to calculate the market value and volatility of the loan for non-trading loans, and then calculate the risk reserve (Dugar and Pozharny 2021).