|Flat price risk|
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Definition of Flat price risk
Flat price risk
Taking a position either long or short that does not involve spreading.
The price at which a willing buyer and a willing unrelated seller would freely agree to
A dealer's price to sell a security; also called the offer price.
The amount of total risk that can be eliminated by diversification by
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
Gives the lessee the option to purchase the asset at a price below fair market
price expressed in terms of yield to maturity or annual rate of return.
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for
risk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio.
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
The risk that the cash flow of an issuer will be impaired because of adverse economic
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
Bond price excluding accrued interest.
The risk that a foreign debtor will be unable to pay its debts because of business events,
Related: Unsystematic risk
See asset-specific risk
The risk that a project will not be brought into operation successfully.
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Consumer Price Index (CPI)
An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.
Conversion parity price
Related:Market conversion price
The contractually specified price per share at which a convertible security can be
Inflation whose initial cause is cost increases rather than excess demand. See also demand-pull inflation.
The risk that the other party to an agreement will default. In an options contract, the risk
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
Financial and moral risk that an obligation will not be paid and a loss will result.
Refers to the volatility of returns on international investments caused by events associated
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
A sustained decrease in the price level. The opposite of an inflation.
A price index used to deflate a nominal value to a real value by dividing the nominal value by the price deflator.
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the
Inflation whose initial cause is excess demand rather than cost increases. See also cost-push inflation.
Devaluation A decrease in the spot price of the currency
Bond price including accrued interest, i.e., the price paid by the bond buyer.
A reduction in the rate of inflation.
Related: unsystematic risk.
Dollar price of a bond
Percentage of face value at which a bond is quoted.
In project financing, the risk that the project's output will not be salable at a price that will
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Escalating Price Option
A nonqualified stock option that uses a sliding scale for
The risk that the ability of an issuer to make interest and principal payments will change because
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
The price at which the underlying future or options contract may be bought or sold.
The price set for buying an asset (call) or selling an asset (put).
Fair market price
Amount at which an asset would change hands between two parties, both having
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Fair price provision
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
The risk that the cash flow of an issuer will not be adequate to meet its financial obligations.
risk to shareholders resulting from the use of debt.
See:diversifiable risk or unsystematic risk.
Fixed price basis
An offering of securities at a fixed price.
Fixed-price tender offer
A one-time offer to purchase a stated number of shares at a stated fixed price,
Flat benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
Flat price (also clean price)
The quoted newspaper price of a bond that does not include accrued interest.
1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid,
Flattening of the yield curve
A change in the yield curve where the spread between the yield on a long-term
Force majeure risk
The risk that there will be an interruption of operations for a prolonged period after a
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Also called dirty price, the price of a bond including accrued interest. Related: flat price.
Related: interest rate risk
The price at which the parties to a futures contract agree to transact on the settlement date.
price index used to deflate nominal GDP to real GDP by dividing nominal GDP by the GDP deflator.
risk that arises when an issuer has policies concentrated within certain geographic areas,
The risk of loss in foreign exchange trading that one party will deliver foreign exchange but the counterparty financial institution will fail to deliver its end of the contract. It is also referred to as settlement risk.
The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
High-Risk Small Business
Firm viewed as being particularly subject to risk from an investors perspective.
Extremely high inflation.
Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words,
The rate at which the general level of prices for goods and services is rising.
Rate at which prices as a whole are increasing.
A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.
A clause in a contract providing for increases or decreases in inflation based on
Also called purchasing-power risk, the risk that changes in the real return the investor will
The loss in purchasing power due to inflation eroding the real value of financial assets such as cash.
The fact that future inflation rates are not known. It is a possible contributing factor to
The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
Interest Rate Risk
Possibility that interest rates will rise during the term of a loan thereby increasing the annual cost of borrowing.
The price that the buyer of a futures contract must pay the seller when a Treasury Bond is delivered.
judgmental method (of risk adjustment)
an informal method of adjusting for risk that allows the decision maker
Law of one price
An economic rule stating that a given security must have the same price regardless of the
law of one price
Theory that prices of goods in all countries should be equal when translated to a common currency.
Maximum price fluctuation
Maximum price fluctuation
The risk that arises from the difficulty of selling an asset. It can be thought of as the difference
This is the day's lowest price of a security that has changed hands between a buyer and a seller.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for
Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The
The amount of money that a willing buyer pays to acquire something from a willing seller,
risk that cannot be diversified away. Related: systematic risk
The amount of total risk that cannot be eliminated by portfolio
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