Proposed Research in Financial Market Simulation

With the proliferation of electronic platforms in the financial markets for exchanging all kinds of financial instruments (ie, securities, derivatives, commodities, futures), electronic intensive orders are a standard market mechanism for price finding in today's financial markets It is getting. As a result, many investors currently use algorithmic trading to automatically make transaction decisions, send orders, and manage these orders after sending. In algorithmic transactions, computer software is used to formulate and execute transaction decisions based on several preprogrammed computer algorithms [1].

This five-step process is called a simulation-based approach and forms the basis of enterprise measurement. In a simulation-based approach, a number of market interest rate scenarios are used to generate a distribution of future financial results. The advantage of this approach is that you can explain the distribution of future financial results in detail. From there we can acquire various risk measurement standards. This is particularly useful when companies change their financial results nonlinearly and the market interest rate changes (for example, when using contracts with options embedded or when traffic volumes react nonlinearly to changes in market interest rates) is. The technology may not provide the necessary flexibility to describe the distribution of detailed results. One disadvantage of simulation-based methods compared to analytic methods is that they are more computationally intensive. If the financial outcome is a linear function of the market interest rate, the analysis method is sufficient.

Exposure mapping process The process of converting market risk exposure into cash flow or market risk sensitive mathematical functions for use as input to simulation. In the context of an enterprise, pro forma financial statements can be used to collect and organize mapped impressions for valuation against specific market interest rate scenarios. Liquidity Risk The term used here refers to the risk that there is not enough funds to satisfy monetary obligations, such as suppliers and debt payments. In other cases, liquidity risk means that insufficient market demand could result in the loss of sales of financial products or positions and possible lower selling prices.