What is a Swap and How Does it Work? A swap is a financial derivative contract between two parties that involves the exchange of cash flows. It is commonly used in trading instruments such as forex, commodities, and interest rate derivatives. The purpose of a swap is to manage or … …
Non-Marginable Securities: Definition, Examples, Vs. Marginable Non-marginable securities are financial instruments that cannot be used as collateral for borrowing funds in a margin account. Margin accounts allow investors to borrow money to buy securities, using the securities themselves as collateral. However, not all securities are eligible for margin trading. Non-marginable … …
Interest Rate Swap: Definition, Types, and Real-World Example An interest rate swap is a financial derivative instrument that allows two parties to exchange interest rate payments on a specified notional amount over a set period of time. It is a popular tool used by businesses and investors to manage their … …
Forward Rate Agreement (FRA) Definition A Forward Rate Agreement (FRA) is a financial derivative contract between two parties that allows them to lock in an interest rate for a future period. It is commonly used by banks, financial institutions, and corporations to hedge against interest rate fluctuations. In a FRA, … …
Forward Contract: Utilization and Risks A forward contract is a popular trading instrument used in financial markets. It is a type of derivative contract that allows two parties to agree on the future delivery of an asset at a predetermined price. Forward contracts are commonly used to hedge against price … …
What are Derivative Warrants? Derivative warrants are financial instruments that give investors the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified time period. They are a type of derivative product, which means their value is derived from an underlying … …
What is a Collateralized Loan Obligation (CLO) Structure? A Collateralized Loan Obligation (CLO) structure is a financial instrument that pools together a portfolio of loans, typically corporate loans, and creates different tranches of securities backed by those loans. These tranches have different levels of risk and return, allowing investors to … …
What is a Collateralized Debt Obligation (CDO)? A Collateralized Debt Obligation (CDO) is a complex financial instrument that is created by pooling together various types of debt, such as mortgages, loans, and bonds, and then dividing them into different tranches or layers of risk. These tranches are then sold to … …
CBOE Volatility Index VIX: An Essential Tool for Investment Analysis One of the key uses of VIX is to assess market sentiment. When the VIX is high, it indicates that investors are expecting increased volatility and are therefore more cautious. Conversely, when the VIX is low, it suggests that investors … …
Cash Equivalents: Types, Features, Examples Cash equivalents are financial instruments that are highly liquid and have a short-term maturity of usually three months or less. They are considered to be almost as good as cash because of their high liquidity and low risk. Definition and Importance of Cash Equivalents Types … …
What is Binary Option Trading? Binary Option Trading is a popular financial instrument that allows traders to speculate on the price movement of various assets, such as stocks, currencies, commodities, and indices. It offers a simple and straightforward way to trade, making it accessible to both novice and experienced traders. … …
Asset-Backed Security Types: A Comprehensive Guide An asset-backed security (ABS) is a type of financial instrument that is backed by a pool of assets. These assets can include loans, receivables, or other types of financial obligations. ABSs are created by packaging these assets together and issuing securities that represent a … …
What is Arbitrage? Arbitrage is a financial strategy that involves taking advantage of price differences between two or more markets or assets. It is based on the principle of buying low and selling high simultaneously in different markets to make a profit. Arbitrage opportunities arise when there are discrepancies in … …