Interest earned on assets less interest paid on liabilities. Interest rate shocks change it, so banks measure its sensitivity. Where it appears →
Net stable funding ratio
A Basel III ratio comparing available stable funding with the funding required over a one-year horizon. It limits reliance on short-term funding for long-term assets. Where it appears →
Netting
Combining positive and negative values with one counterparty into a single net amount on default. It cuts exposure when legally enforceable. Where it appears →
No-arbitrage pricing
Pricing a derivative as the cost of a portfolio that replicates its payoff. Any other price would let someone lock in a risk-free gain. Where it appears →
Normal distribution
The symmetric bell-shaped distribution described fully by its mean and standard deviation. It is convenient and often assumed, but it understates extreme events in markets. Where it appears →
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