What is ‘Gap Risk’
The risk that an investment’s price will change from one level to another with no trading in between. Usually such movements occur when there are adverse news announcements, which can cause a stock price to drop substantially from the previous day’s closing price.
Explaining ‘Gap Risk’
For example, gap risk is the chance that a stock’s price closes at $50 and opens the following trading day at $40 – even though no trades happen between these two times.
Further Reading
- Duration model for maturity gap risk management in Islamic banks – www.emerald.com [PDF]
- Closing the neoliberal gap: risk and regulation in the long war of securitization – onlinelibrary.wiley.com [PDF]
- Pricing and hedging gap risk – papers.ssrn.com [PDF]
- Mind the gap: Disentangling credit and liquidity in risk spreads – academic.oup.com [PDF]
- Time-varying risk premiums and the output gap – academic.oup.com [PDF]
- Duration gap for financial institutions – www.tandfonline.com [PDF]
- Credit gap risk in a first passage time model with jumps – www.tandfonline.com [PDF]
- Mind the gap: bridging economic and naturalistic risk-taking with cognitive neuroscience – www.sciencedirect.com [PDF]
- Top Executives′ Pay Gap, Risk and Companies Performance——An Empirical Study Under the Tournament Theory [J] – en.cnki.com.cn [PDF]
- Bridging the theory-practice gap in corporate finance: a survey of chief financial officers – www.sciencedirect.com [PDF]
