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Financial Terms | |
Flat price risk |
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Definition of Flat price riskFlat price riskTaking a position either long or short that does not involve spreading.
Related Terms:Arm's length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to Ask priceA dealer's price to sell a security; also called the offer price. Asset-specific RiskThe amount of total risk that can be eliminated by diversification by Bankruptcy riskThe risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market Basis priceprice expressed in terms of yield to maturity or annual rate of return. Basis riskThe uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for ![]() Beta riskrisk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio. Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically Business riskThe risk that the cash flow of an issuer will be impaired because of adverse economic Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. Call riskThe combination of cash flow uncertainty and reinvestment risk introduced by a call provision. Clean priceBond price excluding accrued interest. Commercial riskThe risk that a foreign debtor will be unable to pay its debts because of business events, Company-specific riskRelated: Unsystematic risk ![]() Companyspecific RiskSee asset-specific risk Completion riskThe 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 priceRelated:Market conversion price Convertible priceThe contractually specified price per share at which a convertible security can be Cost-Push InflationInflation whose initial cause is cost increases rather than excess demand. See also demand-pull inflation. Counterparty riskThe risk that the other party to an agreement will default. In an options contract, the risk Country financial riskThe ability of the national economy to generate enough foreign exchange to meet Country risk GeneralLevel of political and economic uncertainty in a country affecting the value of loans or Credit riskThe risk that an issuer of debt securities or a borrower may default on his obligations, or that the Credit RiskFinancial and moral risk that an obligation will not be paid and a loss will result. Cross-border riskRefers to the volatility of returns on international investments caused by events associated Currency riskRelated: Exchange rate risk Currency risk sharingAn agreement by the parties to a transaction to share the currency risk associated with Default riskAlso referred to as credit risk (as gauged by commercial rating companies), the risk that an DeflationA sustained decrease in the price level. The opposite of an inflation. DeflatorA price index used to deflate a nominal value to a real value by dividing the nominal value by the price deflator. Delivery priceThe price fixed by the Clearing house at which deliveries on futures are in invoiced; also the Demand-Pull InflationInflation 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
Dirty priceBond price including accrued interest, i.e., the price paid by the bond buyer. DisinflationA reduction in the rate of inflation. Diversifiable riskRelated: unsystematic risk. Dollar price of a bondPercentage of face value at which a bond is quoted. Economic riskIn project financing, the risk that the project's output will not be salable at a price that will Effective call priceThe strike price in an optional redemption provision plus the accrued interest to the Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Escalating Price OptionA nonqualified stock option that uses a sliding scale for Event riskThe risk that the ability of an issuer to make interest and principal payments will change because Exchange rate riskAlso called currency risk, the risk of an investment's value changing because of currency Exchange riskThe variability of a firm's value that results from unexpected exchange rate changes or the Exercise priceThe price at which the underlying future or options contract may be bought or sold. Exercise priceThe price set for buying an asset (call) or selling an asset (put). Fair market priceAmount at which an asset would change hands between two parties, both having Fair priceThe equilibrium price for futures contracts. Also called the theoretical futures price, which equals Fair price provisionSee:appraisal rights. Fallout riskA type of mortgage pipeline risk that is generally created when the terms of the loan to be Financial riskThe risk that the cash flow of an issuer will not be adequate to meet its financial obligations. financial riskrisk to shareholders resulting from the use of debt. Firm-specific riskSee:diversifiable risk or unsystematic risk. Fixed price basisAn offering of securities at a fixed price. Fixed-price tender offerA one-time offer to purchase a stated number of shares at a stated fixed price, Flat benefit formulaMethod 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. Flat trades1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid, Flattening of the yield curveA change in the yield curve where the spread between the yield on a long-term Force majeure riskThe risk that there will be an interruption of operations for a prolonged period after a Foreign exchange riskThe risk that a long or short position in a foreign currency might have to be closed out Full priceAlso called dirty price, the price of a bond including accrued interest. Related: flat price. Funding riskRelated: interest rate risk Futures priceThe price at which the parties to a futures contract agree to transact on the settlement date. GDP Deflatorprice index used to deflate nominal GDP to real GDP by dividing nominal GDP by the GDP deflator. Geographic riskrisk that arises when an issuer has policies concentrated within certain geographic areas, Herstatt riskThe 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. High priceThe highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits. High-Risk Small BusinessFirm viewed as being particularly subject to risk from an investors perspective. HyperinflationExtremely high inflation. Idiosyncratic RiskUnsystematic risk or risk that is uncorrelated to the overall market risk. In other words, InflationThe rate at which the general level of prices for goods and services is rising. inflationRate at which prices as a whole are increasing. InflationA sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level. Inflation-escalator clauseA clause in a contract providing for increases or decreases in inflation based on Inflation riskAlso called purchasing-power risk, the risk that changes in the real return the investor will Inflation TaxThe loss in purchasing power due to inflation eroding the real value of financial assets such as cash. Inflation uncertaintyThe fact that future inflation rates are not known. It is a possible contributing factor to Insolvency riskThe risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk. Interest rate riskThe risk that a security's value changes due to a change in interest rates. For example, a Interest Rate RiskPossibility that interest rates will rise during the term of a loan thereby increasing the annual cost of borrowing. Invoice priceThe 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 priceAn economic rule stating that a given security must have the same price regardless of the law of one priceTheory that prices of goods in all countries should be equal when translated to a common currency. Limit priceMaximum price fluctuation Limit priceMaximum price fluctuation Liquidity riskThe risk that arises from the difficulty of selling an asset. It can be thought of as the difference Low priceThis is the day's lowest price of a security that has changed hands between a buyer and a seller. Low price-earnings ratio effectThe tendency of portfolios of stocks with a low price-earnings ratio to Market conversion priceAlso called conversion parity price, the price that an investor effectively pays for Market price of riskA measure of the extra return, or risk premium, that investors demand to bear risk. The Market pricesThe amount of money that a willing buyer pays to acquire something from a willing seller, Market riskrisk that cannot be diversified away. Related: systematic risk Market RiskThe amount of total risk that cannot be eliminated by portfolio Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |