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23 Cards in this Set
- Front
- Back
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arbitrageur
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one who engages in arbitrage, or buying something in one market and simultaneously selling it at a profit in another market
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clearing corporation
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associated with a futures exchange to guarantee rights and obligations of market participants
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counterparty
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two parties to a swap agreement
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currency swap
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a contractual agreement between two counterparties to exchange payments in different currencies during a future period
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derivative
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a financial instrument such as a swap or an option or futures contract that derives its value from some other, underlying financial asset
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exercise price
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the predetermined price in an option that the underlying asset can be bought at (call) or sold for (put)
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financial futures
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futures contracts whose underlying assets are securities or, in index futures, the cash value of a group of securities
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fixed rate payer
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party in an interest rate swap making fixed payments
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floating rate payer
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party in an interest rate swap making variable payments
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forward contract
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a nonstandardized agreement to exchange an asset in the future at a currently agreed upon price
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hedger
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one who tries to reduce the risk of loss resulting from a change in the price of a particular asset. in futures markets, it is someone who sells a futures contract while holding the underlying asset (short hedger) or purchases such a contract in anticipation of purchasing the underlying asset (long hedger)
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interest rate swap
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a contractual agreement between two counterparties to exchange interest payments during a future period.
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intrinsic value
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a option's value at expiration (or if it is excercised.)
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long
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the buyer of a financial asset, usually an options or futures constract who is also said to "take a long position"
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mark-to-market settlement
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daily adjustments made in balances at a clearing corporation to reflect price changes in futures contracts
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margin
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1) a minimum down payment required by law for the purchase of stock; 2) a deposit placed with a clearing corporation by both the buyer and the seller of a futures contract
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notional principal amount
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agreed upon principal in a swap transaction
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option premium
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the price paid by an option buyer to the option seller for the rights acquired
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puts
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an option contract in which the option buyer has the right (but not the obligation) to sell a specified quantity of the underlying asset at a specified price until the expiration date of the option
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settlement by offset
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the cancellation of rights and obligations in the options and futures markets through purchases and sales of identical contracts
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short
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the seller of a financial asset who still has an outstanding obligation to buy back the asset, especially an options or futures contract. also phrased as "take a short position"
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speculator
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people who take on risk on financial transactions in anticipation of profit
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stike price
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the predetermined price in an option that the underlying asset can be bought at (call) or sold for (put)
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