Ch.10 · Benchmarks and Performance Evaluation · hard
What is 'settlement risk' in the context of mutual fund portfolio management?
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EXPLANATION
Settlement risk (counterparty risk) is the risk that the other party in a securities transaction fails to fulfil their obligation — delivering securities or making payment — by the settlement date. India's equity market uses T+1 settlement, reducing but not eliminating settlement risk. Derivative counterparty risk is managed through clearing corporations.
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