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This term is used in the context of investment funds in connection with the evaluation of the risks associated with derivative instruments. With this approach, for the purposes of risk assessment derivatives are translated in such a way as if they corresponded to an investment in the underlying instrument (nominal value method). The translation into the equivalent underlying asset is called a “commitment”. In the case of futures, for example, this would be the relevant contract value. In the case of a bond future (e.g. Bund future) with a contract value of EUR 100,000, that value would be assigned to the risk position of the fund’s assets under management. The amount of these nominal values (equivalent underlying instruments) in relation to the fund assets shows whether and to what extent an investment fund’s risk position has changed through the use of derivatives.

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