IFM

Frage	Antworten
Real Asset	Used to produce income, such as factory or machine
Financial Asset	Claim on income produced by real asset, Bonds, stocks, derivative security
Derivative Security	Financial Asset that has its value determined by something else, such as stock, bond, interest rate. A contract between 2 parties, bet, and sum from payoff for both sides equal to zero.
Fixed Income Security	Provides a form of fixed, periodic pays and return of the principal at maturity
Purpose of Derivative	Reduce risk, induce risk, one side sees risk reduced while other takes on risk.
Financial Markets	Where financial assets are traded. Can be one-on-one private transactions, organized around a dealer, structured and organized exchanges (NYSE, CME).
Clearning houses	Intermediary between buyer and seller of asset that ensures execution of trade, collection of monies, delivery of asset, collection of data.
Novation	Substitution of one counterparty for another. Derivatives clearinghouses usually become buyers to all sellers and sellers to all buyers.
Market Measures of Activity	trading volume (number of trades), market value, notional value (potential exposure in derivatives), open interest (total number of contracts outstanding)
Use of derivatives	Risk management: reducing risk with derivatives (hedging) Speculation Reduced Transaction Costs: lower transaction cost than individual securities Regulatory Arbitrage: circumventing regulation
End User	Party that buys derivatives
Market Makers	Create derivatives
Economic Observers	includes regulators
Market Order	Purchase at current price
Limit order	instruction to trade a security at a specified or better price
Stop Loss Order	sell once price reaches a specified level
Lease Rate	Payment made on a borrowed asset
Short Selling Reasons	speculation, means of borrowing money, hedging
Haircut	the extra amount of money the owner of the asset asks the short seller to provide.
Repo Rate	Interest paid on the short sale proceeds and the haircut if it is a bond
Short Rebate	Interest paid on the short sale proceeds and the haircut if it is a stock
Forward Contract	Sale transaction consummated in the future of which all details are laid out today
Forward (Long Position)	=Spot price @ expiration - Price Named in Forward Contract
Forward (short position)	=Price named in forward contract - Spot price @ expiration
Value of Long Forward	Price of Underlying - present value of forward contract price
Forward Price	PV(Forward Price)=Price of Underlying The price named in the forward contract that does not require any cash payment up front
Forward Spot Parity	Fe^-rt = S F=Se^rt

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	Erstellt von Joseph Normile vor mehr als 6 Jahre