对解析的两点疑问

问题如下：

What is model risk?

解释：

Trading of financial securities, especially derivative products, relies heavily on mathematical models. Trading losses can be the consequence of model errors due to incorrect assumptions about the underlying asset price process, errors in the calibration of key input parameters such as volatility and correlations, and errors in the derivation of the hedge ratios.

Note that when markets become illiquid (e.g., during a financial crisis), even the best model might not be able to help in hedging the risk of a trading position because traders might not be able to execute the hedge in the market.