Macro risk - Definition

Macro Risk refers to financial risk that is associated with macroeconomic or political factors. Models that incorporate macro risk are generally of two types. The increasing use of business technology has allowed companies to enter new foreign countries and expand their sales to numerous international economic markets. Many times, conducting business in a foreign business environment is not the same as running a business in the United States.

One type, used primarily by stock traders and institutions, focuses on how short-term changes in macro risk factors impact stock returns. These models include the Arbitrage Pricing Theory and the Modern Portfolio Theory families of models.

A common form of macro risk is the fluctuating value of a foreign countries currency. Currency fluctuations may occur for a variety of reasons, including the current Monetary Policy of the foreign country, the Valuation of the currency by foreign markets or significant changes in the value of the foreign country's resources.



Terms near "Macro risk"

Macro-based
Macro-hedge
Macroeconomics
MACRS
MAD
Maggie Mae (MGIC)
Mail-order catalogue
Mainstream corporation tax
Maintenance (Margin)
Maintenance bond
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