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Definition of Spot markets

Spot Markets Image 1

Spot markets

Related: cash markets



Related Terms:

Cash markets

Also called spot markets, these are markets that involve the immediate delivery of a security
or instrument.
Related: derivative markets.


Auction markets

markets in which the prevailing price is determined through the free interaction of
prospective buyers and sellers, as on the floor of the stock exchange.


capital markets

markets for long-term financing.


Derivative markets

markets for derivative instruments.


Devaluation A decrease in the spot price of the currency




efficient capital markets

Financial markets in which security prices rapidly reflect all relevant information about asset values.


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.


Spot Markets Image 2

Emerging markets

The financial markets of developing economies.


financial markets

markets in which financial assets are traded.


Negotiated markets

markets in which each transaction is separately negotiated between buyer and seller (i.e.
an investor and a dealer).


Perfectly competitive financial markets

markets in which no trader has the power to change the price of
goods or services. Perfect capital markets are characterized by the following conditions: 1) trading is costless,
and access to the financial markets is free, 2) information about borrowing and lending opportunities is freely
available, 3) there are many traders, and no single trader can have a significant impact on market prices.


Spot

For immediate payment and delivery, as opposed to future payment and delivery.


Spot curve, spot yield curve

See Zero curve.


Spot exchange rates

Exchange rate on currency for immediate delivery. Related: forward exchange rate.


Spot futures parity theorem

Describes the theoretically correct relationship between spot and futures prices.
Violation of the parity relationship gives rise to arbitrage opportunities.


Spot interest rate

Interest rate fixed today on a loan that is made today. Related: forward interest rates.


Spot Markets Image 3

Spot lending

The origination of mortgages by processing applications taken directly from prospective borrowers.


Spot month

The nearest delivery month on a futures contract.



Spot price

The current marketprice of the actual physical commodity. Also called cash price.


Spot rate

The theoretical yield on a zero-coupon Treasury security.


Spot rate

The current interest rate appropriate for discounting a cash flow of
some given maturity.


Spot rate curve

The graphical depiction of the relationship between the spot rates and maturity.


spot rate of exchange

Exchange rate for an immediate transaction.


Spot trade

The purchase and sale of a foreign currency, commodity, or other item for immediate delivery.


Theoretical spot rate curve

A curve derived from theoretical considerations as applied to the yields of
actually traded Treasury debt securities because there are no zero-coupon Treasury debt issues with a maturity
greater than one year. Like the yield curve, this is a graphical depiction of the term structure of interest rates.



 

 

 

 

 

 

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