|Law of one price|
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Definition of Law of one price
Law of one price
An economic rule stating that a given security must have the same price regardless of the
law of one price
Theory that prices of goods in all countries should be equal when translated to a common currency.
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
The price at which a willing buyer and a willing unrelated seller would freely agree to
A dealer's price to sell a security; also called the offer price.
An option is at-the-money if the strike price of the option is equal to the market price of the
Gives the lessee the option to purchase the asset at a price below fair market
price expressed in terms of yield to maturity or annual rate of return.
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
State laws covering the issue and trading of securities.
Also called the broker loan rate , the interest rate that banks charge brokers to finance
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
Bond price excluding accrued interest.
Raw materials or subassemblies used to make either finished goods
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 price
Related:Market conversion price
The contractually specified price per share at which a convertible security can be
The 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
Bond price including accrued interest, i.e., the price paid by the bond buyer.
With respect to a project financing, an arrangement under which the sponsors of a project
Dollar price of a bond
Percentage of face value at which a bond is quoted.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 “blue-chip” stocks.
economic components model
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Escalating Price Option
A nonqualified stock option that uses a sliding scale for
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
The price at which the underlying future or options contract may be bought or sold.
The price set for buying an asset (call) or selling an asset (put).
Fair market price
Amount at which an asset would change hands between two parties, both having
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Fair price provision
Fiat 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 basis
An offering of securities at a fixed price.
Fixed-price tender offer
A 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 risk
Taking a position either long or short that does not involve spreading.
Also called dirty price, the price of a bond including accrued interest. Related: flat price.
The price at which the parties to a futures contract agree to transact on the settlement date.
Whatever measure of the money supply is chosen for application of the monetarist rule will soon begin to misbehave.
See money base.
The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
Money that moves across country borders in response to interest rate differences and that moves
A put option that has a strike price higher than the underlying futures price, or a call option
International Monetary Fund
An 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
The price that the buyer of a futures contract must pay the seller when a Treasury Bond is delivered.
Law of large numbers
The mean of a random sample approaches the mean (expected value) of the
Maximum price fluctuation
Maximum price fluctuation
This is the day's lowest price of a security that has changed hands between a buyer and a seller.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Market conversion price
Also called conversion parity price, the price that an investor effectively pays for
Market price of risk
A measure of the extra return, or risk premium, that investors demand to bear risk. The
The amount of money that a willing buyer pays to acquire something from a willing seller,
Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace
material price variance
total actual cost of material purchased
Materials price variance
The difference between the actual and budgeted cost to
Maximum price fluctuation
The maximum amount the contract price can change, up or down, during one
Minimum price fluctuation
Smallest increment of price movement possible in trading a given contract. Also
School 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.
Proposal 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.
Any measure of the economy's money supply.
See money base.
Gold held by governmental authorities as a financial asset.
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
Monetizing the Debt
See printing money.
Any item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange.
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Cash plus deposits of the commercial banks with the central bank.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
This 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.
Related: Investment management.
Related: Investment manager.
Money markets are for borrowing and lending money for three years or less. The securities in
A market that specializes in trading short-term, low-risk, very liquid
Market for short-term financial assets.
A financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded.
Financial 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 account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
money market fund
A 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 hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Change in the money supply per change in the money base.
A 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 plan
A defined benefit contribution plan in which the participant contributes some part and
Money Rate of Interest
See interest rate, nominal.
Money rate of return
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits
negotiated transfer price
an intracompany charge for goods
Neutrality of Money
The doctrine that the money supply affects only the price level, with no long-run impact on real variables.
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