Industry WIKI

Finance refers to the management, movement, investment, and raising of money.

A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory body in order to provide advice.

Financial correlations measure the relationship between the changes of two or more financial variables over time. For example, the prices of equity stocks and fixed interest bonds often move in opposite directions: when investors sell stocks, they often use the proceeds to buy bonds and vice versa. In this case, stock and bond prices are negatively correlated.

Financial econometrics is the application of statistical methods to financial data. Financial econometrics is a branch of financial economics, in the field of economics. Areas of study include capital markets, financial institutions, corporate finance and corporate governance. Topics often revolve around asset valuation of individual stocks, bonds, derivatives, currencies and other fina

Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade".

Financial independence is a state in which an individual or household has accumulated sufficient financial resources to cover its cost-of-living expenses without depending on active employment to earn money to maintain its current lifestyle. These financial resources can take the form of investments or personal-use assets, passive income, side-jobs income, inheritance, pension, retiremen

Financial innovation is the act of creating new financial instruments as well as new financial technologies, institutions, and markets. Recent financial innovations include hedge funds, private equity, weather derivatives, retail-structured products, exchange-traded funds, multi-family offices, and Islamic bonds (Sukuk). The shadow banking system has spawned an array of financial innovat

Financial law is the law and regulation of the commercial banking, capital markets, insurance, derivatives and investment management sectors. Understanding financial law is crucial to appreciating the creation and formation of banking and financial regulation, as well as the legal framework for finance generally.

A financial market is a marketplace where the pricing and trade of securities, commodities, currency, derivatives, or other financial products takes place. The term may refer to a specific stock or commodity exchange, or to the general process by which relevant economic activity is organized and carried out.

There are two basic financial market participant distinctions, investors versus speculators and institutional versus retail. Action in financial markets by central banks is usually regarded as intervention rather than participation.

Financial modeling

A financial planner or personal financial planner is a qualified financial advisor. Practicing in full service personal finance, they advise clients on investments, insurance, tax, retirement and estate planning.

Financial regulation is a broad set of policies that apply to the financial sector in most jurisdictions, justified by two main features of finance: systemic risk, which implies that the failure of financial firms involves public interest considerations; and information asymmetry, which justifies curbs on freedom of contract in selected areas of financial services, particularly those tha

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.

The Financial Secrecy Index (FSI) is the report published by the advocacy organization Tax Justice Network (TJN) which ranks countries by financial secrecy indicators, weighted by the economic flows of each country.

Finite difference methods for option pricing are numerical methods used in mathematical finance for the valuation of options. Finite difference methods were first applied to option pricing by Eduardo Schwartz in 1977.

Fixed income is a type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the principal amount on maturity. Fixed-income securities (more commonly known as bonds) can be contrasted with equity securities (often referred to as stocks and

Fixed-income arbitrage is a group of market-neutral-investment strategies that are designed to take advantage of differences in interest rates between varying fixed-income securities or contracts (Jefferson, 2007). Arbitrage in terms of investment strategy, involves buying securities on one market for immediate resale on another market in order to profit from a price discrepancy.

Fixed-Income Relative-Value Investing (FI-RV) is a hedge fund investment strategy made popular by the failed hedge fund Long-Term Capital Management.

A flight-to-quality, or flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and government bonds. This is considered a sign of fear in the marketplace, as investors seek less risk in exchange for lower profits.

A floor trader is a member of a stock or commodities exchange who trades on the floor of that exchange for their own account. The floor trader must abide by trading rules similar to those of the exchange specialists who trade on behalf of others. The term should not be confused with floor broker.

A foreign exchange derivative is a financial contract whose value changes depending on currency exchange rates.

In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument that gives the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. See Foreign exchange derivative.

Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. The exchange risk arises when there is a risk of an unfavourable change in exchange rate between the domestic currency and the denominated currency before the date when

In finance, a foreign exchange swap, forex swap, or FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forward) and may use foreign exchange derivatives. An FX swap allows sums of a certain currency to be used to fund charges designated in another currency without acquiring foreign exchange risk. I

Forex.com is a foreign exchange (FX) and contracts for difference (CFD) trading brand owned by StoneX Group. In the United States, it is operated by GAIN Capital Group LLC, a wholly owned subsidiary of StoneX Group Inc.. The brand offers leveraged trading in currencies, commodities, indices, and cryptocurrencies.

In finance, a forward contract, or simply a forward, is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on in the contract, making it a type of derivative instrument. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a sh

The forward price (or sometimes forward rate) is the agreed upon price of an asset in a forward contract. Using the rational pricing assumption, for a forward contract on an underlying asset that is tradeable, the forward price can be expressed in terms of the spot price and any dividends. For forwards on non-tradeables, pricing the forward may be a complex task.

In finance, a forward rate agreement (FRA) is an interest rate derivative (IRD). In particular, it is a linear IRD with strong associations with interest rate swaps (IRSs).

Fractional-reserve banking is the system of banking under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, and lend a percentage to borrowers, thus increasing the money supply by the loaned amount. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. Fractional-reserv

Front running, also known as tailgating, is the practice of entering into an equity (stock) trade, option, futures contract, derivative, or security-based swap to capitalize on advance, nonpublic knowledge of a large ("block") pending transaction that will influence the price of the underlying security. In essence, it means the use of knowledge of an impending trade to engage in a person

The FTSE MTIRS Indices are designed to accurately move in direct correlation to OTC Interest Rate Swaps market with a total of 45 indices covering the USD curve from 2 years to 30 years including spreads and butterflies. FTSE MTIRS Indices account for changes to both fixed and floating rates and are rebalanced daily.

Full-reserve banking (also known as 100% reserve banking) is a system of banking where banks do not lend demand deposits and instead only lend from time deposits. It differs from fractional-reserve banking, in which banks may lend funds on deposit, while fully reserved banks would be required to keep the full amount of each customer's demand deposits in cash, available for immediate with

A fund derivative (see also derivative) is a financial structured product related to a fund, normally using the underlying fund to determine the payoff. This may be a private equity fund, mutual fund or hedge fund. Purchasers obtain exposure to the underlying fund (or funds) whilst improving their risk profile over a direct investment.

Fund governance refers to a system of checks and balances and work performed by the governing body (board) of an investment fund to ensure that the fund is operated not only in accordance with law, but also in the best interests of the fund and its investors. The objective of fund governance is to uphold the regulatory principles commonly known as the four pillars of investor protection

A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A fund of funds may be "fettered", meaning that it invests only in funds managed by the same investment company, or "unfettered", meaning that it can

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. There are two bas

The fundamental theorems of asset pricing (also: of arbitrage, of finance), in both financial economics and mathematical finance, provide necessary and sufficient conditions for a market to be arbitrage-free, and for a market to be complete. An arbitrage opportunity is a way of making money with no initial investment without any possibility of loss. Though arbitrage opportunities do exis

Fundamentally based indexes or fundamental indexes, also called fundamentally weighted indexes, are indexes in which stocks are weighted according to factors related to their fundamentals such as earnings, dividends and assets, commonly used when performing corporate valuations. This fundamental weight may be calculated statically, or it may be adjusted by the security's fundamental to m

The Fund Transfer Pricing (FTP) measures the contribution by each source of funding to the overall profitability in a financial institution. Funds that go toward lending products are charged to asset-generating businesses whereas funds generated by deposit and other funding products are credited to liability-generating businesses.

In finance, a futures contract (often just called a future) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The item transacted is usually a commodity or financial instrument. The predetermined price of the contract is known as the forward price or delivery pric

The Gibraltar Stock Exchange (GSX) was a stock exchange based in Gibraltar, a British overseas territory. until its closure in 2023.

A giro transfer, often shortened to giro (), is a payment transfer between current bank accounts and initiated by the payer, not the payee. The debit card has a similar model. Giros are primarily used in Europe; although electronic payment systems exist in the United States (e.g., the Automated Clearing House), it is not possible to perform third-party transfers with them. In the Europea

In probability theory, Girsanov's theorem or the Cameron-Martin-Girsanov theorem explains how stochastic processes change under changes in measure.

Global macro trading is an investment strategy that leverages macroeconomic and geopolitical data to analyze and predict moves in financial markets. Large-scale or "macro" political and economic events can disproportionately impact certain sectors, such as the energy, commodity, and currency markets, over others. The strategy typically employs forecasts and analysis of interest rate tren

In business and finance, a golden share is a type of share of stock that lets its owner outvote all other shareholders in certain circumstances. Golden shares often belong to the government when a government-owned company is undergoing the process of privatization and transformation into a stock company.

The Gothenburg congestion tax (Swedish: Trängselskatt i Göteborg), also referred to as the Gothenburg congestion charge, is a congestion pricing system implemented as a tax levied on most vehicles entering and exiting central Gothenburg, Sweden, as well as some main roads passing by the city. The congestion tax was introduced on 1 January 2013, with the Stockholm congestion tax as a mode

The Greater Manchester congestion charge was part of a bid to the government's Transport Innovation Fund for a £3-billion package of transport funding and the introduction of a road congestion charge for Greater Manchester, a metropolitan county in North West England. In 2008, two cordons were proposed—the outer encircling the main urban core of the Greater Manchester Urban Area and the

In mathematical finance, the Greeks are the quantities (known in calculus as partial derivatives; first-order or higher) representing the sensitivity of the price of a derivative instrument, such as an option or future, to changes in one or more underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent. The name is used because the most

The Greenspan put was a monetary policy that Alan Greenspan, during his tenure as chair of the Federal Reserve, exercised in response to financial crises. It was used for the first time with the crash of 1987. Though it was successful in addressing various crises, it became controversial as it led to periods of extreme speculation led by Wall Street investment banks overusing the put's r

Growth investing is a type of investment strategy focused on capital appreciation. Those who follow this style, known as growth investors, invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios. In typical usage, the term "growth investing" contrasts with the strategy

In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth company typically has some sort of competitive advantage (a new product, a breakthrough patent, overseas expansion) that allows it to fend off

In finance, a haircut is the difference between the current market value of an asset and the value ascribed to that asset for purposes of calculating regulatory capital or loan collateral. The amount of the haircut reflects the perceived risk of the asset falling in value in an immediate cash sale or liquidation. The larger the risk or volatility of the asset price, the larger the haircu

In corporate finance, Hamada’s equation is an equation used as a way to separate the financial risk of a levered firm from its business risk. The equation combines the Modigliani–Miller theorem with the capital asset pricing model. It is used to help determine the levered beta and, through this, the optimal capital structure of firms. It was named after Robert Hamada, the Professor of Fi

In probability theory and statistics, a Hawkes process is an age-dependent branching process driven by immigration from an inhomogeneous Poisson process. The process, named after Alan G. Hawkes, is also called a self-exciting point process., i.e., the occurrence of an event increases the likelihood of another event occurring. It has arrivals at times

Headline inflation is a statistical measure of aggregate price movement within an economy, usually expressed as percentage change in the Consumer Price Index (or other price indices) over a specific time period. It is typically measured using a comprehensive array of goods and services, including commercial products such as food and energy (e.g., oil and gas), which tend to be much more

The Heath–Jarrow–Morton (HJM) framework is a general framework to model the evolution of interest rate curves – instantaneous forward rate curves in particular (as opposed to simple forward rates). When the volatility and drift of the instantaneous forward rate are assumed to be deterministic, this is known as the Gaussian Heath–Jarrow–Morton (HJM) model of forward rates. For direct mode

A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, many types of over-the-counter and derivative products, and futures contracts.

In finance, the Heston model, named after Steven L. Heston, is a mathematical model that describes the evolution of the volatility of an underlying asset. It is a stochastic volatility model: such a model assumes that the volatility of the asset is not constant, nor even deterministic, but follows a random process.

High-frequency trading (HFT) is a type of algorithmic automated trading system in finance characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term inve

The history of banking began with the first prototype banks, that is, the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. This was around 2000 BCE in Assyria, India, and Sumer. Later, in ancient Greece and during the Roman Empire, lenders based in temples gave loans, while accepting deposits and performing the change of money. Archaeo

Credit unions are not-for-profit financial cooperatives. In the early stages of development of a nation's financial system, unserved and underserved populations had to rely on risky and expensive informal financial services from sources like money lenders, ROSCAs and saving at home. Credit unions proved they could meet demand for financial services that banks could not: from professio

HKeToll (Chinese: 易通行) is a free-flow tolling system owned by the Transport Department in Hong Kong. It is operated by Autotoll Limited. The system has been gradually put into use in various government-owned tunnels in Hong Kong to replace traditional toll booths and Autotoll from May 2023 onward.

In financial mathematics, the Hull–White model is a model of future interest rates. In its most generic formulation, it belongs to the class of no-arbitrage models that are able to fit today's term structure of interest rates. It is relatively straightforward to translate the mathematical description of the evolution of future interest rates onto a tree or lattice and so interest rate de

Institutional Capital Network, Inc (doing business as iCapital) is an American fintech company that provides platform solutions related to alternative investments in the private markets.

Impact investing refers to investments "made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return". At its core, impact investing is about an alignment of an investor's beliefs and values with the allocation of capital to address social and/or environmental issues.

In financial mathematics, the implied volatility (IV) of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model (usually Black–Scholes), will return a theoretical value equal to the price of the option. A non-option financial instrument that has embedded optionality, such as an interest rate cap, can also have an impl

In economics, incomplete markets are markets in which there does not exist an Arrow–Debreu security for every possible state of nature. In contrast with complete markets, this shortage of securities will likely restrict individuals from transferring the desired level of wealth among states.

In finance, inflation derivative (or inflation-indexed derivatives) refers to an over-the-counter and exchange-traded derivative that is used to transfer inflation risk from one counterparty to another. See Exotic derivative.

An inflation swap is an over-the-counter derivative in which one party pays a fixed inflation rate and the other pays the realised change in a price index such as CPI, RPI or HICP. Markets trade two main structures: the zero-coupon inflation swap, which settles once at maturity, and the year-on-year inflation swap, which pays periodic coupons. Users include pension funds, insurers and ot

An institutional investor is an entity that pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked companies, insurers, pension funds, sovereign wealth funds, charities, hedge funds, real estate investment trusts, investment advisors, endowments, a

An Inter-dealer broker (IDB) is specialist financial intermediary that facilitates transactions between broker-dealers, dealer banks and other financial institutions rather than private individuals.

In finance, an interest rate derivative (IRD) is a derivative whose payments are determined through calculation techniques where the underlying benchmark product is an interest rate, or set of different interest rates. There are a multitude of different interest rate indices that can be used in this definition.

An interest rate future is a futures contract (a financial derivative) with an interest-bearing instrument as the underlying asset. It is a particular type of interest rate derivative. Examples include Treasury-bill futures, Treasury-bond futures and Eurodollar futures.

Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors compare interest rates available on bank deposits in two countries. The fact that this condition does not always hold allows for potential opportunities to earn riskless profits from covered interest arbitrage. Two assumptions central to interest rate parity are capital mobility and p

Interest rate risk refers to the potential for financial loss due to fluctuations in interest rates. It will, in turn, impact differently re market risk, i.e. impacting instruments such as Bonds, re banks and re insurers.

In finance, an interest rate swap (IRS) is an interest rate derivative (IRD). It involves exchange of interest rates between two parties. In particular it is a "linear" IRD and one of the most liquid, benchmark products. It has associations with forward rate agreements (FRAs), and with zero coupon swaps (ZCSs).

The internal contradictions of capital accumulation is an essential concept of crisis theory, which is associated with Marxist economic theory. While the same phenomenon is described in neoclassical economic theory, in that literature it is referred to as systemic risk.

International tax planning also known as international tax structures or expanded worldwide planning (EWP), is an element of international taxation created to implement directives from several tax authorities following the 2008 worldwide recession.

Intertemporal portfolio choice is the process of allocating one's investable wealth to various assets, especially financial assets, repeatedly over time, in such a way as to optimize some criterion. The set of asset proportions at any time defines a portfolio. Since the returns on almost all assets are not fully predictable, the criterion has to take financial risk into account. Typicall

In finance, the intrinsic value of an asset or security is its value as calculated with regard to an inherent, objective measure. As a distinction, the asset's price is determined relative to other similar assets.

An investment advisory is a service that recommends certain securities primed for appreciation, usually through direct management of clients' assets or by way of written publications.

Investment banking is an advisory-based financial service primarily for corporations, governments, and institutional investors. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of debt or equity securities. An investment bank may also provide services to companies involve

Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institutions, such as insurance companies, pension funds, corporations, charities, edu

Investment performance is the return on an investment portfolio, which can contain a single asset or multiple assets.

Investment style,

An investor is a person or entity that allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital the investor usually purchases some species of property. Types of investments include equity, debt, securities, real estate, infrastructure, currency, commodity, token, derivatives such as put and call optio

An investor profile or style defines an individual's preferences in investment decisions, for example:

In finance an iron butterfly, also known as the ironfly, is the name of an advanced, neutral-outlook, options trading strategy that involves buying and holding four different options at three different strike prices. It is a limited-risk, limited-profit trading strategy that is structured for a larger probability of earning smaller limited profit when the underlying stock is perceived to

The iron condor is an options trading strategy utilizing two vertical spreads – a put spread and a call spread with the same expiration and four different strikes. A long iron condor is essentially selling both sides of the underlying instrument by simultaneously shorting the same number of calls and puts, then covering each position with the purchase of further out of the money call(s)

Islamic banking, Islamic finance (Arabic: مصرفية إسلامية masrifiyya 'islamia), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics. Some of the modes of Islamic finance include mudarabah (profit-sharing and loss-bearing), wadiah (safekeeping), musharaka (joint ventu

Islamic finance products, services and contracts are financial products and services and related contracts that conform with Sharia (Islamic law). Islamic banking and finance has its own products and services that differ from conventional banking. These include Mudharabah (profit sharing), Wadiah (safekeeping), Musharakah (joint venture), Murabahah (cost plus finance), Ijar (leasing), Ha

Itô calculus, named after Kiyosi Itô, extends the methods of calculus to stochastic processes such as Brownian motion (see Wiener process). It has important applications in mathematical finance, in stochastic differential equations, and more recently even in machine learning.

J.P. Morgan & Co. was an American financial institution specialized in investment banking, asset management and private banking founded by financier J. P. Morgan in 1871. Through a series of mergers and acquisitions, the company is now a subsidiary of JPMorgan Chase, the largest banking institution in the world by market capitalization. The company has been historically referred to as th

A jelly roll, or simply a roll, is an options trading strategy that captures the cost of carry of the underlying asset while remaining otherwise neutral. It is often used to take a position on dividends or interest rates, or to profit from mispriced calendar spreads.

In finance, Jensen's alpha (or Jensen's Performance Index, ex-post alpha) is used to determine the abnormal return of a security or portfolio of securities over the theoretical expected return. It is a version of the standard alpha based on a theoretical performance instead of a market index.

Jump diffusion is a stochastic process that involves jumps and diffusion. It is a type of Lévy process. It has important applications in magnetic reconnection, coronal mass ejections, condensed matter physics, and pattern theory and computational vision.

Know your customer or know your client (KYC) laws, regulations and guidelines in financial services require regulated businesses and professionals to verify the identity of a customer, and the suitability and risks involved with maintaining a business relationship with them. These procedures fit within the broader scope of anti-money laundering (AML) and counter terrorism financing (CTF)

The Korn–Kreer–Lenssen model (KKL model) is a discrete trinomial model proposed in 1998 by Ralf Korn, Markus Kreer and Mark Lenssen to model illiquid securities and to value financial derivatives on these.

In statistics and decision theory, kurtosis risk is the risk that results when a statistical model assumes the normal distribution, but is applied to observations which have a tendency to occasionally be much further (in terms of number of standard deviations) from the average than is expected for a normal distribution.