Replacement Risk

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Dictionary Says

Definition of 'Replacement Risk'

The risk that a contract holder will know that the counterparty will be unable to meet the terms of a contract, creating the need for a replacement contract. 

Also known as "replacement-cost risk".
Investopedia Says

Investopedia explains 'Replacement Risk'

For example, if a counterparty in an agreement fails to fulfill its contractual obligation, you will have to replace whatever it was the counterparty was supposed to deliver (e.g. an interest rate, a stock, a commodity, etc). Of course, there is a good chance that you won't be able to do this at the same price because the market will have moved since the contract was created.
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'Replacement Risk'

  • Do You Need Casualty Insurance?

    http://www.investopedia.com/articles/pf/08/casualty-insurance.asp
    ... Actual cash value is the replacement cost less depreciation. ... 2. Preferred Risk Policy:
    The preferred risk policy is a cheaper option that covers the area that ...

  • Extended Warranties: Should You Take The Bait?

    http://www.investopedia.com/articles/pf/07/warranties.asp
    ... the cost of services and repairs for three years and includes a replacement guarantee
    if the ... Risk-Reward Ratio The concept of weighing risk and reward is a key ...

  • Oil Companies With High Reserve-Replacement Ratios

    http://stocks.investopedia.com/stock-analysis/2009/Oil-Companies-With-High-Reserve-Replacement-Ratios-CRZO-UPL-XOM-GDP1012.aspx
    ... Bottom Line The reserve-replacement ratio is a tricky measure that shouldn't be ... Stock
    Simulator to trade the stocks mentioned in this stock analysis, risk free ...

  • CFP Study Guide - Principles of Risk and Insurance - The Risk ...

    http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/cfp2.asp
    ... 9.8 Business Related Risk Exposures. 10. ... 10.4 Replacement Values of Lost
    Property; 10.5 Homeowner Endorsements and Auto Insurance; ...

  • CFP Study Guide - Principles of Risk and Insurance - Introduction ...

    http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/default.asp
    ... 9.8 Business Related Risk Exposures. 10. ... 10.4 Replacement Values of Lost
    Property; 10.5 Homeowner Endorsements and Auto Insurance; ...

  • Enhanced Index Funds: Can They Deliver Low-Risk Returns?

    http://www.investopedia.com/articles/mutualfund/07/enhanced_index.asp
    ... and Why Fund Managers Risk Too Much.) The expense ratios and turnover rates are ... index
    funds as a supplement to a standard index fund rather than a replacement. ...

  • Trading OEX Options: The Risk Of Early Exercise

    http://www.investopedia.com/articles/optioninvestor/09/early-exercise-oex.asp
    ... As such, your upside risk is unchanged, but your potential downside profit is ...
    cash-settled option, the option position is canceled and there is no replacement. ...

  • Rolling LEAP Options

    http://www.investopedia.com/articles/optioninvestor/07/rolling_leaps.asp
    ... Advantages Of Options, Alternatives To Closing Below Intrinsic Value and Reducing
    Risk With Options Using LEAP calls, like any stock-replacement strategy, is ...

  • Understanding Lender-Required Flood Insurance

    http://www.investopedia.com/articles/insurance/10/understanding-lender-required-flood-insurance.asp
    ... Look at the replacement value for your house as determined by your homeowners'
    insurance company. ... You may now be in a high-risk flood zone even if you weren't ...

  • Target Strategies Often Miss The Mark

    http://www.investopedia.com/articles/retirement/09/target-date-target-risk-strategies.asp
    ... from a menu of plan offerings to achieve specific risk-reward parameters ... funds within
    the portfolio that underperform or otherwise merit replacement can be ...

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