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Financial Terms | |
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
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. Arms indexAlso known as a trading index (TRIN)= (number of advancing issues)/ (number of declining Asian optionoption based on the average price of the asset during the life of the option. ![]() Auction marketsmarkets in which the prevailing price is determined through the free interaction of 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 Bear marketAny market in which prices are in a declining trend. bear marketA market in which stock or bond prices are generally Bear MarketA prolonged period of falling stock market prices. Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black marketAn illegal market. ![]() Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Bond indexingDesigning a portfolio so that its performance will match the performance of some bond index. Brokered marketA market where an intermediary offers search services to buyers and sellers. Bull marketAny market in which prices are in an upward trend. bull marketA market in which stock or bond prices are generally rising. Bull MarketA prolonged period of rising stock market prices. Bulldog marketThe foreign market in the United Kingdom. Buying the indexPurchasing the stocks in the S&P 500 in the same proportion as the index to achieve the 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. Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Capital marketThe market in which investors buy and sell shares of companies, normally associated with a Stock Exchange. Capital MarketA market that specializes in trading long-term, relatively high risk Capital MarketThe market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded. Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe 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. capital marketsmarkets for long-term financing. Cash marketsAlso called spot markets, these are markets that involve the immediate delivery of a security Common marketAn agreement between two or more countries that permits the free movement of capital Common stock marketThe market for trading equities, not including preferred stock. Complete capital marketA market in which there is a distinct marketable security for each and every Compound optionoption on an option. 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. Corner A MarketTo purchase enough of the available supply of a commodity or stock in order to Covered or hedge option strategiesStrategies that involve a position in an option as well as a position in the Currency optionAn option to buy or sell a foreign currency. Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Dealer optionsOver-the-counter options, such as those offered by government and mortgage-backed Debt marketThe market for trading debt instruments. Delivery optionsThe options available to the seller of an interest rate futures contract, including the quality Derivative marketsmarkets for derivative instruments. Direct search marketBuyers and sellers seek each other directly and transact directly. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. Domestic marketPart of a nation's internal market representing the mechanisms for issuing and trading 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. Down-and-out optionBarrier option that expires if asset price hits a barrier. EAFE indexThe European, Australian, and Far East stock index, computed by Morgan Stanley. Efficient capital marketA market in which new information is very quickly reflected accurately in share efficient capital marketsFinancial markets in which security prices rapidly reflect all relevant information about asset values. Efficient Market HypothesisIn general the hypothesis states that all relevant information is fully and Efficient Markets HypothesisThe hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security. Either-way marketIn the interbank Eurodollar deposit market, an either-way market is one in which the bid 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 Emerging marketsThe financial markets of developing economies. Enhanced indexingAlso called indexing plus, an indexing strategy whose objective is to exceed or replicate Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Equity marketRelated:Stock market 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 Eurocurrency marketThe money market for borrowing and lending currencies that are held in the form of 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. Excess return on the market portfolioThe difference between the return on the market portfolio and the 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. External marketAlso referred to as the international market, the offshore market, or, more popularly, the Fair market priceAmount at which an asset would change hands between two parties, both having Fair market valueThe price that an asset or service will fetch on the open market. Fair Market ValueThe highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact. Farm Improvement and Marketing Cooperatives Loans ActSee here Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal Open Market Committee (FOMC)Fed committee that makes decisions about open-market operations. Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsmarkets in which financial assets are traded. Fixed-income marketThe market for trading bonds and preferred stock. Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Foreign bond marketThat portion of the domestic bond market that represents issues floated by foreign Foreign currency optionAn option that conveys the right to buy or sell a specified amount of foreign Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. Foreign Exchange MarketA worldwide market in which one country's currency is bought or sold in exchange for another country's currency. Foreign marketPart of a nation's internal market, representing the mechanisms for issuing and trading Foreign market betaA measure of foreign market risk that is derived from the capital asset pricing model. Forward Exchange MarketA market in which foreign exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now. Forward marketA market in which participants agree to trade some commodity, security, or foreign Fourth marketDirect trading in exchange-listed securities between investors without the use of a broker. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |