# Equity price risk

- Canonical URL: https://www.gerhardmerk.de/equity-price-risk
- Post ID: 588663
- Modified: 2023-07-25T21:00:43+00:00
- Language: en

## Definition

In general, the risk of loss due to fluctuations (oscillations: movements above and below a mean value) in share prices. - Insurance companies are particularly affected. In 2002, insurance companies in Europe had invested thirty-one percent of their assets in equity securities (in the U.S. only four percent); in purely arithmetical terms, they lost around forty-five percent between the end of 1998 and the end of 2002 due to the stock market slump. - The ECB is also exposed to equity price risk in its monetary policy operations to the extent that it recognizes equities as collateral. - In a stress test, usually the assumption that a sudden, unexpected price drop of thirty percent occurs in all stock markets within one month. - See equity portfolio, hedged, equities, cyclical, equity risk premium, actuary, cover pool, quanto, hedging assets, uncertainty, volatility risk. - See Deutsche Bundesbank Monthly Report of December 2003, pp. 59 ff; ECB Monthly Report of April 2007, pp. 36 ff (measuring uncertainty in the stock market); ECB Monthly Report of October 2007, pp. 93 ff (comparing collateral arrangements at the ECB with the U.S. and Japan; many overviews); ECB Monthly Report of November 2008, pp. 93 ff (stock market valuation and equity risk premium; detailed presentation). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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