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Financial Terms | |
Money market hedge |
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Definition of Money market hedgeMoney market hedgeThe use of borrowing and lending transactions in foreign currencies to lock in the
Related Terms:Additional hedgeA protection against borrower fallout risk in the mortgage pipeline. At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Auction marketsmarkets in which the prevailing price is determined through the free interaction of 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. Black marketAn illegal market. ![]() 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. Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance 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 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 ![]() Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Debt marketThe market for trading debt instruments. Delta hedgeA dynamic hedging strategy using options with continuous adjustment of the number of options 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 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 Emerging marketsThe financial markets of developing economies. Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Equity marketRelated:Stock market Eurocurrency marketThe money market for borrowing and lending currencies that are held in the form of Excess return on the market portfolioThe difference between the return on the market portfolio and the 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. 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. 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 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. Futures marketA market in which contracts for future delivery of a commodity or a security are bought or sold. Gray marketPurchases and sales of eurobonds that occur before the issue price is finally set. HedgeA transaction that reduces the risk of an investment. HedgeA securities transaction that reduces or offsets the risk on an existing Hedge fundA fund that may employ a variety of techniques to enhance returns, such as both buying and Hedge inventoryExcess inventories kept on hand as a buffer against contingent Hedge ratio (delta)The ratio of volatility of the portfolio to be hedged and the return of the volatility of the Hedged portfolioA portfolio consisting of the long position in the stock and the short position in the call High-Powered MoneySee money base. 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 Index and Option Market (IOM)A division of the CME established in 1982 for trading stock index Intermarket sectorspread The spread between the interest rate offered in two sectors of the bond market for Intermarket spread swapsAn exchange of one bond for another based on the manager's projection of a Internal marketThe mechanisms for issuing and trading securities within a nation, including its domestic Internally efficient marketOperationally efficient market. International marketRelated: See external market. International Monetary Market (IMM)A division of the CME established in 1972 for trading financial Intramarket sector spreadThe spread between two issues of the same maturity within a market sector. For Inverted marketA futures market in which the nearer months are selling at price premiums to the more Locked marketA market is locked if the bid = ask price. This can occur, for example, if the market is Long hedgeThe purchase of a futures contract(s) in anticipation of actual purchases in the cash market. Used Lower of cost or marketAn accounting valuation rule that is used to reduce the Make a marketA dealer is said to make a market when he quotes bid and offered prices at which he stands Mark-to-marketThe process whereby the book value or collateral value of a security is adjusted to reflect mark to marketRefers to the accounting method that records increases Marked-to-marketAn arrangement whereby the profits or losses on a futures contract are settled each day. Market-book ratiomarket price of a share divided by book value per share. Market capitalizationThe total dollar value of all outstanding shares. Computed as shares times current Market CapitalizationAggregate value of a corporation as determined by the market price of its total issued and outstanding stock. market capitalization, or market capCurrent market value per share of Market capitalization rateExpected return on a security. The market-consensus estimate of the appropriate Market clearingTotal demand for loans by borrowers equals total supply of loans from lenders. The market, Market conversion priceAlso called conversion parity price, the price that an investor effectively pays for Market cycleThe period between the 2 latest highs or lows of the S&P 500, showing net performance of a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |