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Financial Terms | |
Law of one price |
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Definition of Law of one priceLaw 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.
Related Terms:All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable 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. At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the 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. Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically Blue-sky lawsState laws covering the issue and trading of securities. Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance 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. Clean priceBond price excluding accrued interest. ComponentRaw materials or subassemblies used to make either finished goods 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 Delivery priceThe price fixed by the Clearing house at which deliveries on futures are in invoiced; also the 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. Dividend clawbackWith respect to a project financing, an arrangement under which the sponsors of a project Dollar price of a bondPercentage of face value at which a bond is quoted. Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. ![]() 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 European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies 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. Fiat MoneyFiat Money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. 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 price (also clean price)The quoted newspaper price of a bond that does not include accrued interest. Flat price riskTaking a position either long or short that does not involve spreading. Full priceAlso called dirty price, the price of a bond including accrued interest. Related: flat price. Futures priceThe price at which the parties to a futures contract agree to transact on the settlement date. Goodhart's LawWhatever measure of the money supply is chosen for application of the monetarist rule will soon begin to misbehave. High-Powered MoneySee money base. High priceThe highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits. Hot moneyMoney that moves across country borders in response to interest rate differences and that moves In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Invoice priceThe price that the buyer of a futures contract must pay the seller when a Treasury Bond is delivered. Law of large numbersThe mean of a random sample approaches the mean (expected value) of the Limit priceMaximum price fluctuation Limit priceMaximum price fluctuation 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, Marketplace price efficiencyThe degree to which the prices of assets reflect the available marketplace material price variancetotal actual cost of material purchased Materials price varianceThe difference between the actual and budgeted cost to Maximum price fluctuationThe maximum amount the contract price can change, up or down, during one Minimum price fluctuationSmallest increment of price movement possible in trading a given contract. Also MonetarismSchool of economic thought stressing the importance of the money supply in the economy. Adherents believe that the economy is inherently stable, so that policy is best undertaken through adoption of a policy rule. Monetarist RuleProposal that the money supply be increased at a steady rate equal approximately to the real rate of growth of the economy. Contrast with discretionary policy. Monetary AggregateAny measure of the economy's money supply. Monetary BaseSee money base. Monetary goldGold held by governmental authorities as a financial asset. Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary PolicyActions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity. Monetizing the DebtSee printing money. MoneyAny item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange. Money baseComposed of currency and coins outside the banking system plus liabilities to the deposit money banks. Money BaseCash plus deposits of the commercial banks with the central bank. Money center banksBanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Money LaunderingThis is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins. Money managementRelated: Investment management. Money managerRelated: Investment manager. Money marketMoney markets are for borrowing and lending money for three years or less. The securities in Money MarketA market that specializes in trading short-term, low-risk, very liquid money marketMarket for short-term financial assets. Money MarketA financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded. Money MarketFinancial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.) Money market demand accountAn account that pays interest based on short-term interest rates. Money market fundA mutual fund that invests only in short term securities, such as bankers' acceptances, money market fundA type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates. Money market hedgeThe use of borrowing and lending transactions in foreign currencies to lock in the Money market notesPublicly traded issues that may be collateralized by mortgages and MBSs. Money MultiplierChange in the money supply per change in the money base. money orderA guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription. Money purchase planA defined benefit contribution plan in which the participant contributes some part and Money Rate of InterestSee interest rate, nominal. Money rate of returnAnnual money return as a percentage of asset value. Money supplyM1-A: Currency plus demand deposits negotiated transfer pricean intracompany charge for goods Neutrality of MoneyThe doctrine that the money supply affects only the price level, with no long-run impact on real variables. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |