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Definition of Price Index
A measure of the price level calculated by comparing the cost of a bundle of goods and services in a given year with its cost in a base year. See also index.
The CPI, as it is called, measures the prices of consumer goods and services and is a
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.
Bond whose payments are linked to an index, e.g. the consumer price index.
A method for restating financial statements by reducing or
The reference year when constructing a price index. By tradition it is given the value 100.
A price index used to deflate a nominal value to a real value by dividing the nominal value by the price deflator.
price index used to deflate nominal GDP to real GDP by dividing nominal GDP by the GDP deflator.
A series of numbers measuring percentage changes over time from a base period. The index number for the base period is by convention set equal to 100.
A weighted average of prices of all goods and services where the weights are given by total spending on each good or service. Measured by a price index.
GDP expressed in base-year dollars, calculated by dividing nominal GDP by a price index.
Income expressed in base-year dollars, calculated by dividing nominal income by a price index.
Money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
Wage expressed in base-year dollars, calculated by dividing the money wage by a price index.
The quantity of imports that can be obtained for a unit of exports, measured by the ratio of an export price index to an import price index.
Also known as a trading index (TRIN)= (number of advancing issues)/ (number of declining
Arm's length price
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.
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
Designing a portfolio so that its performance will match the performance of some bond index.
Buying the index
Purchasing the stocks in the S&P 500 in the same proportion as the index to achieve the
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.
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.
Dollar price of a bond
Percentage of face value at which a bond is quoted.
The European, Australian, and Far East stock index, computed by Morgan Stanley.
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
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
The price at which the underlying future or options contract may be bought or sold.
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
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 risk
Taking a position either long or short that does not involve spreading.
Flat price (also clean price)
The quoted newspaper price of a bond that does not include accrued interest.
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.
The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
An investment/trading strategy that exploits divergences between actual and theoretical
Investment fund designed to match the returns on a stockmarket index.
A model of stock returns using a market index such as the S&P 500 to represent common or
A call or put option based on a stock market index.
A stock index option issued by either a corporate or sovereign entity as part of a security
A passive instrument strategy consisting of the construction of a portfolio of stocks designed to
The price that the buyer of a futures contract must pay the seller when a Treasury Bond is delivered.
An index that uses the capital asset pricing model to determine whether a money manager
Law of one price
An economic rule stating that a given security must have the same price regardless of the
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
Maximum price fluctuation
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,
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Marketplace price efficiency
The degree to which the prices of assets reflect the available marketplace
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
price quotations on futures for a period in which no actual trading took place.
The range of prices at which the first bids and offers were made or first transactions were
Optimization approach to indexing
An approach to indexing which seeks to Optimize some objective, such
Also called the option premium, the price paid by the buyer of the options contract for the right
Compares a stock's market value to the value of total assets less total liabilities (book
Price/earnings ratio (PE ratio)
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Price/sales ratio (PS Ratio)
Determined by dividing current stock price by revenue per share (adjusted for stock splits).
The limitation of the price appreciation potential for a callable bond in a declining interest
Price discovery process
The process of determining the prices of the assets in the marketplace through the
The percentage change in the quantity divided by the percentage change in the price.
Price impact costs
Related: market impact costs
Related: Relative strength
Related: Relative strength
The risk that the value of a security (or a portfolio) will decline in the future. Or, a type of
Individuals who respond to rates and prices by acting as though they have no influence on them.
The market has already incorporated information, such as a low dividend, into the price of a stock.
Price value of a basis point (PVBP)
Also called the dollar value of a basis point, a measure of the change in
price of a share of common stock on the date shown. Highs and lows are based on the highest and
Adjustment mechanism under the classical gold standard whereby
A relationship espoused by some technical analysts that signals continuing rises
The present value of the future cash flows divided by the initial investment. Also called
Pure index fund
A portfolio that is managed so as to perfectly replicate the performance of the market portfolio.
The price at which the asset will be sold if a put option is exercised. Also called the strike or
Reverse price risk
A type of mortgage-pipeline risk that occurs when a lender commits to sell loans to an
Categories of risk used to calculate fundamental beta, including (1) market variability, (2)
A figure determined by the closing range which is used to calculate gains and losses in
Single index model
A model of stock returns that decomposes influences on returns into a systematic factor,
Related: market model
The current marketprice of the actual physical commodity. Also called cash price.
Stated conversion price
At the time of issuance of a convertible security, the price the issuer effectively
Stock index option
An option in which the underlying is a common stock index.
Stratified equity indexing
A method of constructing a replicating portfolio in which the stocks in the index
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