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ABC Agreement
ABC Agreement is an agreement between a firm that finances a seat on the New York Stock Exchange and the employee who purchases the seat. The agreement, approved by the exchange, permits the member to transfer the seat to another employee of the member...
Accelerated Death Benefit – ADB
A death benefit in some life insurance policies that may be paid before the policyholder’s actual death. Generally speaking, one may use the accelerated death benefit only to defray medical expenses should the policyholder be diagnosed with a terminal...
Adjustable-Rate Preferred Stock – ARPS
A type of preferred stock where the dividends issued will vary with a benchmark, most often a T-bill rate. preferred stock , whose dividend instead of being fixed is adjusted, usually quarterly, based on changes in the Treasury bill rate or other money...
What is Backtesting?
Backtesting The process of testing a trading strategy on prior time periods. Backtesting (or back-testing) is the process of evaluating a strategy, theory, or model by applying it to historical data. It can be used in situations like studying how a trading...
What is a Mini-Sized Dow Options?
Mini-Sized Dow Options is a highly leveraged index option on a futures contract in which the underlying index is the Dow Jones Industrial Average. The option has a multiplier of five, meaning that the option allows one to buy (for a call) or sell (for...
Globally Floored Contract
Globally Floored Contract is a guarantee found in structured investment products that provides a minimum payoff at maturity. A globally floored contract will protect the investor or minimize his loss in case the underlying investment loses its value. With...
Booking the Basis
A table or book of tables showing the yields of bonds at different interest rates and maturities. For example, if one is considering the purchase of a bond, one can take the coupon rate and the maturity and compare them in the basis book to determine...
Black Scholes Model
The Black–Scholes model is a mathematical description of financial markets and derivative investment instruments. The model develops partial differential equations whose solution, the Black–Scholes formula, is widely used in the pricing of European-style...
Binomial Option Pricing Model
The binomial options pricing model (BOPM) provides a generalizable numerical method for the valuation of options. The binomial model was first proposed by Cox, Ross and Rubinstein (1979). Essentially, the model uses a “discrete-time” model...
Bermuda Option:An Overview
A Bermudan option is an option where the buyer has the right to exercise at a set (always discretely spaced) number of times. This is intermediate between a European option—which allows exercise at a single time, namely expiry—and an American option,...
Bermuda Swaption
A swaption with predefined limitations on exercise.The buyer of a swaption has the right to enter into an interest rate swap agreement by some specified date in the future. The swaption agreement will specify whether the buyer of the swaption will be...
Bilateral Netting: Explained
What is Bilateral Netting? Bilateral netting is a legally enforceable arrangement between a bank and a counterparty that creates a single legal obligation covering all included individual contracts.The process of consolidating swap agreements between...
Dangers of naked puts
What a naked put option is? A put option gives the buyer the right to sell a given stock at a given price on or before a given date. It also gives the seller the obligation to buy the stock at the given price on or before the given date.Naked puts...
Tips for Selling Your Timeshare
Selling your timeshare by -yourself is not an easy task. But if you do have the skills, then why not. But things won’t be the same if you do it yourself. There are several factors that needed to be considered in selling timeshares. Or else, you...
How to Learn to Be a Successful Stock, Forex , Futures Trader With a Solid Trading Plan
How to Learn to Be a Successful Stock, Forex , Futures Trader With a Solid Trading Plan to Learn to trade the investment markets you need to have proper skill and knowledge. The successful traders have learned how to trade and cut their trading losses....
