What is mark-to-market valuation in SAP IS-B-RA - Risk Analysis?

SAP Term: mark-to-market valuation

• Component: IS-B-RA

• Component Name: Risk Analysis

• Description: Valuation of traded financial instruments at a price obtainable on the market. This price is the close-out price that could easily be achieved on the market, such as the stock exchange prices, screen price Reuters, Bloomberg, or quotes from independent brokers.

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• Key Concepts: 
  Mark-to-market valuation is a method of valuing a financial instrument based on its current market value. In the context of SAP IS-B-RA Risk Analysis, mark-to-market valuation is used to assess the risk associated with a particular financial instrument. It is used to calculate the current market value of a financial instrument and compare it to its original purchase price. This comparison helps to identify any potential risks associated with the instrument. 
  
  How to use it: 
  In order to use mark-to-market valuation in SAP IS-B-RA Risk Analysis, users must first enter the details of the financial instrument into the system. This includes the purchase price, current market value, and any other relevant information. Once this information is entered, the system will calculate the current market value of the instrument and compare it to its original purchase price. This comparison will help users identify any potential risks associated with the instrument. 
  
  Tips & Tricks: 
  When using mark-to-market valuation in SAP IS-B-RA Risk Analysis, it is important to ensure that all relevant information is entered accurately. This includes not only the purchase price and current market value, but also any other relevant information such as maturity date or coupon rate. Additionally, users should be aware that mark-to-market valuation does not take into account any potential future changes in market conditions or other factors that could affect the value of the instrument. 
  
  Related Information: 
  Mark-to-market valuation is just one of many methods used in SAP IS-B-RA Risk Analysis. Other methods include Monte Carlo simulation, sensitivity analysis, and scenario analysis. Additionally, users should be aware that mark-to-market valuation is not suitable for all types of financial instruments and may not provide an accurate assessment of risk in certain cases.