|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
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 that can be exercised any time until its
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.
A market in which stock or bond prices are generally
A prolonged period of falling stock market prices.
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.
A market in which stock or bond prices are generally rising.
A prolonged period of rising stock market prices.
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
cafeteria plan a “menu” of fringe benefit options that include
cash or nontaxable benefits
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
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The 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 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.
markets for long-term financing.
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
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 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.
DLOM (discount for lack of marketability)
an amount or percentage deducted from an equity interest to reflect lack of marketability.
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 capital markets
Financial markets in which security prices rapidly reflect all relevant information about asset values.
Efficient Market Hypothesis
In general the hypothesis states that all relevant information is fully and
Efficient Markets Hypothesis
The 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.
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
Escalating Price Option
A nonqualified stock option that uses a sliding scale for
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 that can be exercised only on its expiration date.
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.
A variety of options available to an investor to recover their invested capital and the return on their investment.
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
Fair market value
The price that an asset or service will fetch on the open market.
Fair Market Value
The 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 Act
Federal funds market
The 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.
An organized institutional structure or mechanism for creating and exchanging financial assets.
markets in which financial assets are traded.
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.
Foreign Exchange Market
A worldwide market in which one country's currency is bought or sold in exchange for another country's currency.
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.
Forward Exchange Market
A 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.
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.
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