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Financial Terms | |
Down-and-out option |
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Definition of Down-and-out optionDown-and-out optionBarrier option that expires if asset price hits a barrier.
Related Terms:Abandonment optionThe option of terminating an investment earlier than originally planned. American optionAn option that may be exercised at any time up to and including the expiration date. American optionAn option that can be exercised any time until its American-style optionAn option contract that can be exercised at any time between the date of purchase and Arbitrage-free option-pricing modelsYield curve option-pricing models. Asian optionoption based on the average price of the asset during the life of the option. Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market ![]() Barrier optionsContracts with trigger points that, when crossed, automatically generate buying or selling of Basket optionsPackages that involve the exchange of more than two currencies against a base currency at Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Borrower falloutIn the mortgage pipeline, the risk that prospective borrowers of loans committed to be BreakoutA rise in a security's price above a resistance level (commonly its previous high price) or drop Builder buydown loanA mortgage loan on newly developed property that the builder subsidizes during the BuydownsMortgages in which monthly payments consist of principal and interest, with portions of these BuyoutPurchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buy-out is cafeteria plan a “menu” of fringe benefit options that includecash or nontaxable benefits Call an optionTo exercise a call option. Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. CashoutRefers to a situation where a firm runs out of cash and cannot readily sell marketable securities. Compound optionoption on an option. Covered or hedge option strategiesStrategies that involve a position in an option as well as a position in the CramdownThe ability of the bankruptcy court to confirm a plan of reorganization over the objections of Crowding OutDecreases in aggregate demand which accompany an expansionary fiscal policy, dampening the impact of that policy. Currency optionAn option to buy or sell a foreign currency. Customary payout ratiosA range of payout ratios that is typical based on an analysis of comparable firms. Days' sales outstandingAverage collection period. Dealer optionsOver-the-counter options, such as those offered by government and mortgage-backed Delivery optionsThe options available to the seller of an interest rate futures contract, including the quality Dividend payout ratioPercentage of earnings paid out as dividends. dividend payout ratioComputed by dividing cash dividends for the year dividend payout ratioPercentage of earnings paid out as dividends. Doubling optionA sinking fund provision that may allow repurchase of twice the required number of bonds Down-and-in optionBarrier option that comes into existence if asset price hits a barrier. DowngradeA classic negative change in ratings for a stock, and or other rated security. downsizingany management action that reduces employment Elasticity of an optionPercentage change in the value of an option given a 1% change in the value of the Embedded optionAn option that is part of the structure of a bond that provides either the bondholder or Equity optionsSecurities that give the holder the right to buy or sell a specified number of shares of stock, at Escalating Price OptionA nonqualified stock option that uses a sliding scale for European optionoption that may be exercised only at the expiration date. Related: american option. European optionAn option that can be exercised only on its expiration date. European-style optionAn option contract that can only be exercised on the expiration date. Exercising the optionThe act buying or selling the underlying asset via the option contract. Exit OptionsA variety of options available to an investor to recover their invested capital and the return on their investment. Fallout riskA type of mortgage pipeline risk that is generally created when the terms of the loan to be Feasible target payout ratiosPayout ratios that are consistent with the availability of excess funds to make FIFO (First In, First Out)An inventory valuation method that presumes that the first units received were the first ones First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest First-In-First-Out (FIFO)A method of valuing the cost of goods sold that uses the cost of the oldest item in First-in, first-out (FIFO)A method of accounting for inventory. First-in, first-out (FIFO)An inventory valuation method under which one assumes that the First-In, First-Out (FIFO) Inventory MethodThe inventory cost-flow assumption that Foreign currency optionAn option that conveys the right to buy or sell a specified amount of foreign Freight outThe transportation cost associated with the delivery of goods from a company Full-Employment OutputThe level of output produced by the economy when operating at the natural rate of unemployment. Full-payout leaseSee: financial lease. Futures optionAn option on a futures contract. Related: options on physicals. Garmen-Kohlhagen option pricing modelA widely used model for pricing foreign currency options. Greenshoe optionoption that allows the underwriter for a new issue to buy and resell additional shares. Heavenly Parachute Stock OptionA nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her Incentive Stock OptionAn option to purchase company stock that is not taxable Index and Option Market (IOM)A division of the CME established in 1982 for trading stock index Index optionA call or put option based on a stock market index. input-output coefficienta number (prefaced as a multiplier Input-output tablesTables that indicate how much each industry requires of the production of each other Interest OptionOne of several investment accounts in which your premiums may be invested within your life insurance policy. Intrinsic value of an optionThe amount by which an option is in-the-money. An option which is not in-themoney inventory write-downRefers to making an entry, usually at the close of a Investor falloutIn the mortgage pipeline, risk that occurs when the originator commits loan terms to the Irrational call optionThe implied call imbedded in the MBS. Identified as irrational because the call is Last-In-First-Out (LIFO)A method of valuing inventory that uses the cost of the most recent item in Last-in, first-out (LIFO)An inventory costing methodology that bases the recognized cost of Last-in, first-out (LIFO)An inventory valuation method under which one assumes that the Last-In, First-Out (LIFO) Inventory MethodThe inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory Last-in, first-out (LILO)A method of accounting for inventory. Leveraged buyoutThe purchase of one business entity by another, largely using borrowed Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use leveraged buyout (LBO)Acquisition of the firm by a private group using substantial borrowed funds. LIFO (Last-in-first-out)The last-in-first-out inventory valuation methodology. A method of valuing LIFO (Last In, First Out)An inventory valuation method that presumes that the last units received were the first ones Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co. Lock-outWith PAC bond CMO classes, the period before the PAC sinking fund becomes effective. With Lookback optionAn option that allows the buyer to choose as the option strike price any price of the Management buyout (MBO)Leveraged buyout whereby the acquiring group is led by the firm's management. management buyout (MBO)Acquisition of the firm by its own management in a leveraged buyout. Margin requirement (Options)The amount of cash an uncovered (naked) option writer is required to Multi-option financing facilityA syndicated confirmed credit line with attached options. Naked option strategiesAn unhedged strategy making exclusive use of one of the following: Long call National OutputGDP. Netting outTo get or bring in as a net; to clear as profit. Nonqualified Stock OptionA stock option not given any favorable tax treatment Open-outcryThe method of trading used at futures exchanges, typically involving calling out the specific OptionGives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a OptionSee call option and put option OptionA right to buy or sell specific securities or commodities at a stated Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |