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AGEC 317 EX1 > AGEC FINAL > Flashcards

AGEC FINAL Flashcards

1
Q

The restatement of an interest rate (e.g., continuously compounded) in terms of an annualized simple interest rate.

A

Annual Percentage Rate (APR):

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2
Q

: a contract between you and another party in which one of you receives regular payments over a fixed period of time, either beginning immediately or at some point in the future

A

Annuity

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3
Q

: A system of mediating disputes before going to the courts

A

Arbitration

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4
Q

The price at which a dealer offers to sell securities to a customer

A

Ask (or offer) price

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5
Q

A futures market where the futures price is lower than the spot price. Opposite to contango

A

Backwardation:

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6
Q

The spot price minus the futures price

A

Basis:

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7
Q

One-hundredth (1/100th) of 1 percent

A

Basis point (or bp):

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8
Q

A trade benefiting from decrease in security price

A

Bearish trade

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9
Q

is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole.

A

Beta

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10
Q

The price at which a dealer is willing to buy securities from a customer.

A

Bid price

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11
Q

The debt issued by a borrower who promises both to pay interest on the borrowing and to repay the principal borrowed at some future date

A

Bond or fixed-income security

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12
Q

The return earned on a bond if held until maturity. Same as Yield-to-Maturity

A

Bond-equivalent yield

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13
Q

A financial intermediary who matches buyers and sellers and earns commissions for this service

A

Broker:

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14
Q

: A trade benefiting from increase in security price

A

Bullish trade

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15
Q

Jargon for “taking a long position in a futures contract”

A

Buying a future

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16
Q

A financial security that gives the owner the right to buy a specified quantity of a financial or real asset on or before a fixed future date by paying an exercise price agreed on when the contract is written.

A

Call option

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17
Q

Profit/loss realized by selling an asset at a price higher/lower than the purchase price

A

Capital gain or loss

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18
Q

Ending a derivatives contract by making a cash payment instead of exchanging physical securities or commodities

A

Cash settlement

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19
Q

When buy and sell orders are matched, the trade is officially recognized, and the trade is recorded by the exchange’s clearinghouse

A

Clearing (a trade):

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20
Q

An entity associated with or part of an exchange that clears trades

A

Clearinghouse

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21
Q

The end of a day’s trading session

A

Close (markets)

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22
Q

A trade that cancels an outstanding open position. Same as offsetting trade

A

Closing transaction (or a reversing trade)

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23
Q

an organized exchange for the trading of futures and options

A

CME (Chicago Mercantile Exchage)

24
Q

Futures trader such as a farmer, manufacturer, or commodities dealer who has legitimate hedging needs because of her commercial activity with the underlying commodity.

A

Commercial trader (futures)

25
Q

The US federal government agency regulating futures and futures on option markets

A

Commodity Futures Trading Commission (CFTC)

26
Q

An idealized description of a market populated by a large number of traders who are too insignificant to influence prices.

A

Competitive market

27
Q

A futures market where the futures price is higher than the spot price

A

Contango

28
Q

refers to costs associated with the carrying value of an investment.

A

Cost-of-carry

29
Q

A hedge in which the spot and futures positions do not exactly offset each other.

A

Cross-hedge (imperfect hedge)

30
Q

A limit order that gets cancelled if it is not executed by the end of the trading day during which it is placed.

A

Day order:

31
Q

Trader who tries to profit from daily price movements, opening trading positions in the morning and closing them out at night.

A

Day trader

32
Q

A financial intermediary who posts prices at which she buys

A

Dealer

33
Q

A failure to pay a promised payment on a financial contract at the promised time.

A

Default

34
Q

A predetermined date on which a seller of a futures contract agrees to deliver the underlying commodity to the buyer in exchange for the futures price

A

Delivery date (or maturity date):

35
Q

Time period during which delivery of the underlying commodity can occur

A

Delivery period (futures)

36
Q

A financial contract that derives its value from an underlying variable such as a stock price, a commodity price, or even an interest rate.

A

Derivative (or a derivative security)

37
Q

A risk that can be eliminated in a portfolio of securities via diversification.

A

Diversifiable risk:

38
Q

is a risk management strategy that mixes a wide variety of investments within a portfolio.

A

Diversification

39
Q

Payment in the form of cash or stocks made to existing stockholders

A

Dividend

40
Q

A hedge that is regularly adjusted over time to maintain a riskless position

A

Dynamic hedging

41
Q

the quantitative application of statistical and mathematical models using data to develop theories or test existing hypotheses in economics and to forecast future trends from historical data

A

Econometrics

42
Q

A market in which security prices “fully and accurately” reflect all relevant information

A

Efficient market

43
Q

A physical or electronic location where buyers and sellers meet to trade a standardized commodity under a given set of rules.

A

Exchange

44
Q

Terminating a futures contract with a spot trade in which the buyer and the seller privately negotiate the delivery of the commodity at a location different from those specified in the futures contract.

A

Exchange for physical (EFP)

45
Q

A trade is executed when the counterparties agree on the terms, conditions, price, and quantity and commit to transact.

A

Execution

46
Q

The last day that an option holder gets to exercise the option.

A

Expiration date (option)

47
Q

Paper assets such as stocks, bonds, and currencies that represent claims to real assets.

A

Financial assets

48
Q

Futures contracts based on financial assets (like foreign currencies) or financial variables (like interest rates).

A

Financial futures (or financials):

49
Q

A binding agreement between a buyer and a seller to trade some commodity at a fixed price at a later date

A

Forward contract

50
Q

A futures contract is an exchange-traded agreement between a buyer and a seller to trade a specific commodity at a fixed price at a later date

A

Futures contract (or futures):

51
Q

Every commodity, such as gold, oil, wheat, or beef, is priced in a couple of ways: its spot price and its futures price.

A

Futures price

52
Q

The ratio of the size of futures or option position used for hedging and the size of the asset being hedged.

A

Hedge ratio

53
Q

an investment that is made with the intention of reducing the risk of adverse price movements in an asset

A

Hedge

54
Q

Trader whose aim is to reduce pre-existing risk by trading derivatives and other securities

A

Hedger

55
Q

A computerized trading strategy pursuing fleeting profit opportunities by trading at the blink of an eye

A

High-frequency trading (HTF)

AGEC 317 EX1 (3 decks)

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