SHOP

Markets that bring issuers of debt and equity together with investors.

A straight line in a risk-return map showing all the combinations of total return and market risk that are possible by allocating capital between an optimal portfolio of risky assets and a risk-free investment.

CAPM explains the relationship that should exist between the expected return and the risk, of a security or a portfolio. This theory is concerned with deriving the expected or required rates of return on a risky asset based on the asset’s systematic risk level measured by beta. In this financial…

An increase in the value of a portfolio or a particular security due to a rise in the market price from the time of purchase to the time of sale.

Refers to a desired level of capital maintained by a financial institution to cover losses. It is an indication of the firm’s ability to remain a viable concern.

The difference between market value of a bank’s/financial institution’s assets and liabilities. The primary purpose is to protect against large unexpected losses. As seen in the ‘credit crisis’ it is also meant to instill confidence to external investors and protect the firm’s credit rating.

A swap that may be terminated prior to its scheduled maturity at the discretion of the fixed-rate payer.

A feature on a bond allowing the issuer to buy back or call the bond at a specific price and on a specific date.

1). An option that grants the holder the right to buy the underlying asset from the option writer. 2). The act of redeeming an instrument prior to its scheduled maturity.

The date specified as such for the calculation of the cash settlement amount on an interest-rate or exchange-rate contract. If the calculation and settlement dates differ, the calculation date will precede the settlement date.

A passive portfolio management strategy in which stocks or bonds are purchased and held for several years or up to maturity regardless of the market’s fluctuations. Such a strategy enables investors to minimize the cost of transactions and tax obligations from capital gains.

The ups and downs of the economy measured by four phases: peak, recession, trough and recovery and expansion.