Yield volatility can be seen at different times. The degree of variability of the environment depends on the duration of the basic interval. We are talking about market conditions, if clarified, the market rates.
This value is calculated as the residual variance with respect to some variable level. This indicator characterizes a certain average, both for the bank and for the market. To represent a variable level, it suffices to take an approximating smooth curve. The deviation from its point values of the sub-portfolio in the past period should be minimal. Depending on the type of asset, volatility characterizes credit or market risk. Also, this concept includes all operational risks.
Average volatility is aggressive. It shows how much asset the investor is willing to risk. If the numbers do not exceed 5%, then we can talk about the minimum level of losses. In this case, the probability of discharge is minimal. Maximum volatility indicates the largest value of loss or profit, taken modulo.