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Derivatives Market
The derivatives market is the financial market for derivatives - financial instruments like futures contracts or options - which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different, as well as the way they are traded, though many market participants are active in both. The derivatives market in Europe has a notional amount of €660 trillion. Participants in a derivative market Participants in a derivative market can be segregated into four sets based on their trading motives. * Hedgers * Speculators * Margin Traders * Arbitrageurs Types of trades in a derivative market * Directional Trades * Spreads * Arbitrage positions * Hedged Trades Futures markets Futures exchanges, such as Euronext.liffe and the Chicago Mercantile Exchange, trade in standardized derivative contracts. These are options contracts, swaps c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Market
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities. The term "market" is sometimes used for what are more strictly ''exchanges'', that is, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (such as the New York Stock Exchange (NYSE), London Stock Exchange (LSE), Bombay Stock Exchange (BSE) or Johannesburg Stock Exchange ( JSE Limited)) or an electronic system such as NASDAQ. Much trading of stocks takes place on an exchange; still, corporate actions (mergers, spinoffs) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell the stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Option (finance)
In finance, an option is a contract which conveys to its owner, the ''holder'', the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified date, depending on the style of the option. Options are typically acquired by purchase, as a form of compensation, or as part of a complex financial transaction. Thus, they are also a form of asset (or contingent liability) and have a valuation that may depend on a complex relationship between underlying asset price, time until expiration, market volatility, the risk-free rate of interest, and the strike price of the option. Options may be traded between private parties in '' over-the-counter'' (OTC) transactions, or they may be exchange-traded in live, public markets in the form of standardized contracts. Definition and application An option is a contract that allows the holder the right to buy or sell an underlying asset or financia ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Over-the-counter (finance)
Over-the-counter (OTC) or off-exchange trading or pink sheet trading is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price. In an OTC trade, the price is not necessarily publicly disclosed. OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such products. Products traded on traditional stock exchanges, and other regulated bourse platforms, must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in stock exchange-based equities trading. The OTC market does not have this limitation. Parties may ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Government-sponsored Enterprise
A government-sponsored enterprise (GSE) is a type of financial services corporation created by the United States Congress. Their intended function is to enhance the flow of Credit (finance), credit to targeted sectors of the economy, to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors: agriculture, Home mortgage, home finance and Education loan, education. Well known GSEs are the Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac. Congress created the first GSE in 1916 with the creation of the Farm Credit System. It initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Commercial Bank
A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. It can also refer to a bank or a division of a larger bank that deals with wholesale banking to corporations or large or middle-sized businesses, to differentiate from retail banks and investment banks. Commercial banks include private sector banks and public sector banks. However, central banks function differently from commercial banks, despite a common misconception known as the "bank analogy". Unlike commercial banks, central banks are not primarily focused on generating profits and cannot become insolvent in the same way as commercial banks in a fiat currency system. History The name ''bank'' derives from the Italian word ''banco'' 'desk/bench', used during the Italian Renaissance era by Florentine bankers, who used to carry out their transactions on a desk covered by a green tablecloth. However, traces of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hedge Fund
A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and insulate returns from beta (finance), market risk. Among these portfolio (finance), portfolio techniques are short (finance), short selling and the use of leverage (finance), leverage and derivative (finance), derivative instruments. In the United States, financial regulations require that hedge funds be marketed only to institutional investors and high-net-worth individuals. Hedge funds are considered alternative investments. Their ability to use leverage and more complex investment techniques distinguishes them from regulated investment funds available to the retail market, commonly known as mutual funds and Exchange-traded fund, ETFs. They are also considered distinct from private-equity fund, private equity funds and other similar cl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the ''bid–ask spread'' or ''turn.'' This stabilizes the market, reducing price variation (Volatility (finance), volatility) by setting a trading price range for the asset. In U.S. markets, the U.S. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. A Designated Primary Market Maker (DPM) is a specialized market maker approved by an exchange to guarantee a buy or sell position in a particular assigned security, option, or option index. In currency exchange Most foreign exchange trading firms are market makers, as are many banks. The foreign exchange market maker both buys foreign currency from clients and sells it to other clients. They derive income from the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investment Bank
Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow, while money received in a series of several time periods is termed cash flow stream. In finance, the purpose of investing is to generate a return on the invested asset. The return may consist of a capital gain (profit) or loss, realised if the investment is sold, unrealised capital appreciation (or depreciation) if yet unsold. It may also consist of periodic income such as dividends, interest, or rental income. The return may also include currency gains ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bank For International Settlements
The Bank for International Settlements (BIS) is an international financial institution which is owned by member central banks. Its primary goal is to foster international monetary and financial cooperation while serving as a bank for central banks. With its establishment in 1930 it is the oldest international financial institution. Its initial purpose was to oversee the settlement of World War I war reparations. The BIS carries out its work through its meetings, programmes and through the Basel Process, hosting international groups pursuing global financial stability and facilitating their interaction. It also provides banking services, but only to central banks and other international organizations. The BIS is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City. History Background International monetary cooperation started to develop tentatively in the course of the 19th century. An early case was a £400,000 loan in gold coins, in 1825 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Trillion (short Scale)
This list contains selected positive numbers in increasing order, including counts of things, dimensionless quantities and probabilities. Each number is given a name in the short scale, which is used in English-speaking countries, as well as a name in the long scale, which is used in some of the countries that do not have English as their national language. Smaller than (one googolth) * ''Physics:'' The probability of a human spontaneously teleporting due to quantum effects is approximately 10−4.5×1029. * ''Mathematics – random selections:'' Approximately is a rough first estimate of the probability that a typing " monkey", or an English-illiterate typing robot, when placed in front of a typewriter, will type out William Shakespeare's play ''Hamlet'' as its first set of inputs, on the precondition it typed the needed number of characters. However, demanding correct punctuation, capitalization, and spacing, the probability falls to around 10−360,783. * ''C ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Short (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common Long (finance), long Position (finance), position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller. There are a number of ways of achieving a short position. The most basic is physical selling short or short-selling, by which the short seller Securities lending, borrows an asset (often a security (finance), security such as a share (finance), share of stock or a bond (finance), bond) and sells it. The short seller must later buy the same amount of the asset to return it to the lender. If the market price of the asset has fallen in the meantime, the short seller will have made a profit equal to the difference in price. Conversely, if the price has risen then the short seller will bear a loss. The short seller ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
The Writer, Long (finance)
''The'' is a grammatical Article (grammar), article in English language, English, denoting nouns that are already or about to be mentioned, under discussion, implied or otherwise presumed familiar to listeners, readers, or speakers. It is the definite article in English. ''The'' is the Most common words in English, most frequently used word in the English language; studies and analyses of texts have found it to account for seven percent of all printed English-language words. It is derived from gendered articles in Old English which combined in Middle English and now has a single form used with nouns of any gender. The word can be used with both singular and plural nouns, and with a noun that starts with any letter. This is different from many other languages, which have different forms of the definite article for different genders or numbers. Pronunciation In most dialects, "the" is pronounced as (with the voiced dental fricative followed by a schwa) when followed by a con ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
