Term
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Definition
| The fixed rate of interest paid by a fixed income security |
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Term
| Cross Rates/Cross Currencies/Currency Crosses |
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Definition
| 1. Is the currency rate between two currencies when the pair are not the currency of the trade - in the test it's assumed all traders are in the US, so cross rates do not involve the $USD |
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Term
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Definition
| The rate that the Federal Reserve charges at the Fed window to member banks to borrow to meet reserve requirements |
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Definition
| The cost of one country's currency expressed in a denomination of another contry's currency |
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Term
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Definition
| Volatile currencies have large fluctuations over short periods |
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Term
| Forward Contract/Forward Transaction |
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Definition
| An agreement whereby actual delivery of and full payment for the currency on a future date is expected |
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Term
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Definition
| = Spot rate +/- forward points (interest reate differential) |
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Term
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Definition
| Addition or subtration from the current spot rate, influenced by time value, exchange ratees and interest rates - not influenced by volatility |
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Term
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Definition
| Type of forward contract that allows the customer to buy or sell a specific currency at a specific exchange rate on a specific future date |
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Term
| Interest rate differential |
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Definition
| Collected by the investor long the higher rate and short the lower |
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Term
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Definition
| Expected that interest rates tend to move toward parity |
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Term
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Definition
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Term
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Definition
| First currency listed in the pair |
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Term
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Definition
| Second currency listed in the pair |
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Term
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Definition
aka Dollar Terms - Quote shows number of foreign currency units required to purchase $1. USD is base (1st) currency
ex. USD/CAD - .9759
.9759 canadian = 1 USD |
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Term
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Definition
Number of USDs required to purchase one unit of the foreign currency. USD is the Quote (2nd) Currency
Ex. EUR/USD - 1.3158
1.3158 USD = 1 EUR |
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Term
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Definition
Foreign currency is the Base (1st) and the domestic is the Quote (2nd)
ex. EUR/USD |
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Term
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Definition
Domestic is the Base (1st) and the foreign is the Quote (2nd)
ex USD/CAD |
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Term
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Definition
Percentage in Point
Normally .0001
w/ Yen .01 |
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Term
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Definition
| Normally 2nd business day after trade date |
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Term
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Definition
| Roll position to the next day, interest is received by holder of higher interest rate and paid by holder of lower rate |
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Term
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Definition
| Describes closing and delivery of a currency. Price on the curernt date (spot) is and delivery is expected the (next) |
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Term
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Definition
| Used when investor rolls the pair to the next day, but still intends to close the position. Allows trader to receive the the interest for an additional day and still not take delivery of the physical |
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Term
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Definition
| Exchange of 1 currency for another with an agreement to repurchase the currecny at some point in the future at a predetermined price |
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Term
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Definition
| Don't fit the description of American/European Style, traded otc |
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Term
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Definition
The contract either becomes active or ceases to exist based on the underlying reaching a certain level up or down.
Can be calls/puts
Can be American/European exercise style
Carry lower premiums due to the barier limitations |
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Term
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Definition
| Start out worthless only carry value once the underlying reaches the barrier |
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Term
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Definition
| Start out active and become worthless is a barrier is reached |
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Term
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Definition
| Can be knock-in or knock-out, but there are 2 barriers instead of 1 |
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Term
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Definition
| Option on another option contract |
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