XVAs: a gap between theory and practice
Hull and White see splits on FVA, MVA, KVA as irreconcilable
John Hull and Alan White are professors of finance at the Joseph L. Rotman School of Management, University of Toronto
In 2012, we wrote an article on funding valuation adjustment (FVA) for the 25th anniversary issue of Risk magazine. The FVA Debate argued dealers should not make FVAs – which are supposed to reflect the funding effects associated with derivatives collateral posting – and generated
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