|Index and Option Market (IOM)
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Definition of Index and Option Market (IOM)
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
an amount or percentage deducted from an equity interest to reflect lack of marketability.
model for calculating DLOM for minority interests r the discount rate
The option of terminating an investment earlier than originally planned.
An option that may be exercised at any time up to and including the expiration date.
An option contract that can be exercised at any time between the date of purchase and
Yield curve option-pricing models.
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining
option based on the average price of the asset during the life of the option.
markets in which the prevailing price is determined through the free interaction of
Gives the lessee the option to purchase the asset at a price below fair market
Contracts with trigger points that, when crossed, automatically generate buying or selling of
Packages that involve the exchange of more than two currencies against a base currency at
Any market in which prices are in a declining trend.
An option pricing model in which the underlying asset can take on only two
An illegal market.
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses
Designing a portfolio so that its performance will match the performance of some bond index.
A market where an intermediary offers search services to buyers and sellers.
Any market in which prices are in an upward trend.
The foreign market in the United Kingdom.
Buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the
Call an option
To exercise a call option.
An option contract that gives its holder the right (but not the obligation) to purchase a specified
The market for trading long-term debt instruments (those that mature in more than one year).
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
Also called spot markets, these are markets that involve the immediate delivery of a security
An agreement between two or more countries that permits the free movement of capital
Common stock market
The market for trading equities, not including preferred stock.
Complete capital market
A market in which there is a distinct marketable security for each and every
option on an option.
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Corner A Market
To purchase enough of the available supply of a commodity or stock in order to
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
An option to buy or sell a foreign currency.
A market where traders specializing in particular commodities buy and sell assets for their
Over-the-counter options, such as those offered by government and mortgage-backed
The market for trading debt instruments.
The options available to the seller of an interest rate futures contract, including the quality
markets for derivative instruments.
Direct search market
Buyers and sellers seek each other directly and transact directly.
Part of a nation's internal market representing the mechanisms for issuing and trading
A sinking fund provision that may allow repurchase of twice the required number of bonds
Barrier option that comes into existence if asset price hits a barrier.
Barrier option that expires if asset price hits a barrier.
The European, Australian, and Far East stock index, computed by Morgan Stanley.
Efficient capital market
A market in which new information is very quickly reflected accurately in share
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
In the interbank Eurodollar deposit market, an either-way market is one in which the bid
Elasticity of an option
Percentage change in the value of an option given a 1% change in the value of the
An option that is part of the structure of a bond that provides either the bondholder or
The financial markets of developing economies.
Also called indexing plus, an indexing strategy whose objective is to exceed or replicate
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
The money market for borrowing and lending currencies that are held in the form of
option that may be exercised only at the expiration date. Related: american option.
An option contract that can only be exercised on the expiration date.
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Exercising the option
The act buying or selling the underlying asset via the option contract.
Also referred to as the international market, the offshore market, or, more popularly, the
Fair market price
Amount at which an asset would change hands between two parties, both having
Federal funds market
The market where banks can borrow or lend reserves, allowing banks temporarily
An organized institutional structure or mechanism for creating and exchanging financial assets.
The market for trading bonds and preferred stock.
Foreign banking market
That portion of domestic bank loans supplied to foreigners for use abroad.
Foreign bond market
That portion of the domestic bond market that represents issues floated by foreign
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
Part of a nation's internal market, representing the mechanisms for issuing and trading
Foreign market beta
A measure of foreign market risk that is derived from the capital asset pricing model.
A market in which participants agree to trade some commodity, security, or foreign
Direct trading in exchange-listed securities between investors without the use of a broker.
A market in which contracts for future delivery of a commodity or a security are bought or sold.
An option on a futures contract. Related: options on physicals.
Garmen-Kohlhagen option pricing model
A widely used model for pricing foreign currency options.
Purchases and sales of eurobonds that occur before the issue price is finally set.
option that allows the underwriter for a new issue to buy and resell additional shares.
An investment/trading strategy that exploits divergences between actual and theoretical
Investment fund designed to match the returns on a stockmarket index.
A model of stock returns using a market index such as the S&P 500 to represent common or
A call or put option based on a stock market index.
A stock index option issued by either a corporate or sovereign entity as part of a security
Bond whose payments are linked to an index, e.g. the consumer price index.
A passive instrument strategy consisting of the construction of a portfolio of stocks designed to
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
The mechanisms for issuing and trading securities within a nation, including its domestic
Internally efficient market
Operationally efficient market.
Related: See external market.
International Monetary Market (IMM)
A division of the CME established in 1972 for trading financial
Intramarket sector spread
The spread between two issues of the same maturity within a market sector. For
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
A futures market in which the nearer months are selling at price premiums to the more
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
An index that uses the capital asset pricing model to determine whether a money manager
Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill
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