Industry WIKI

Alpha is a measure of the active return on an investment, the performance of that investment compared with a suitable market index. An alpha of 1% means the investment's return on investment over a selected period of time was 1% better than the market during that same period; a negative alpha means the investment underperformed the market.

Alternative trading system (ATS) is a US and Canadian regulatory term for a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. Alternative trading systems are typically regulated as broker-dealers rather than as exchanges (although an alternative trading system can apply to be regulated as a securities exchange). In general, for regulatory

An Asian option (or average value option) is a special type of option contract. For Asian options, the payoff is determined by the average underlying price over some pre-set period of time. This is different from the case of the usual European option and American option, where the payoff of the option contract depends on the price of the underlying instrument at exercise; Asian options a

All asset management companies, also known as AMCs, in Malaysia are overseen by the Malaysian Investment Development Authority (MIDA). AMC is generally an asset management / investment management company/firm that invests the pooled funds of investors in securities in line with the stated investment objectives.

The term asset swap has a number of different meanings:

In options trading, the backspread is the converse strategy to the ratio spread and is also known as the reverse ratio spread. Using calls, a bullish strategy known as the call backspread can be constructed and with puts, a strategy known as the put backspread can be constructed.

Backwardation is a market condition where the price of a commodity's forward or futures contract price is trading below the spot price.

A bank transaction tax is a tax levied on debit (and/or credit) entries on bank accounts. In 1989, at the Buenos Aires meetings of the International Institute of Public Finance, University of Wisconsin–Madison Professor of Economics Edgar L. Feige proposed extending the tax reform ideas of John Maynard Keynes, James Tobin and Lawrence Summers, to their logical conclusion, namely to tax a

A basket option is a financial derivative, more specifically an exotic option, whose underlying is a weighted sum or average of different assets that have been grouped together in a basket. A basket option is similar to an index option, where a number of stocks have been grouped together in an index and the option is based on the price of the index, but differs in that the members and we

In options trading, a bear spread is a bearish, vertical spread options strategy that can be used when the options trader is moderately bearish on the underlying security.

In finance, the beta (β or market beta or beta coefficient) is a statistic that measures the expected increase or decrease of an individual stock price in proportion to movements of the stock market as a whole. Beta can be used to indicate the contribution of an individual asset to the market risk of a portfolio when it is added in small quantity. It refers to an asset's non-diversifiabl

The bid–ask spread (also bid–offer or bid/ask and buy/sell in the case of a market maker) is the difference between the prices quoted (either by a single market maker or in a limit order book) for an immediate sale (ask) and an immediate purchase (bid) for stocks, futures contracts, options, or currency pairs in some auction scenario. The size of the bid–ask spread in a security is one m

A block trade is a high-volume transaction in a security that is privately negotiated and executed outside of the open market for that security. Major broker-dealers often provide "block trading" services—sometimes known as "upstairs trading desks"—to their institutional clients. In the United States and Canada a block trade is usually at least 10,000 shares of a stock or $100,000 of bo

A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds. Bond funds typically pay periodic dividends that include interest payments on the fund's underlying securities plus periodic realized capital appreciation. Bond funds typically pay higher dividends than CDs and money market accounts. Most bon

A bought out deal is a method of offering company shares to the general public through a sponsor or underwriter (a bank, financial institution, or an individual). The securities are listed in one or more stock exchanges within a time frame mutually agreed upon by the company and the sponsor. This option saves the issuing company the costs and time involved in a public issue. The cost of

In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and derivatives trading process.

The Buffett indicator (or the Buffett metric, or the Market capitalization-to-GDP ratio) is a valuation multiple used to assess how expensive or cheap the aggregate stock market is at a given point in time. It was proposed as a metric by investor Warren Buffett in 2001, who called it "probably the best single measure of where valuations stand at any given moment", and its modern form co

In options trading, a bull spread is a vertical spread options strategy that is designed to profit from a moderate rise in the price of the underlying security.

In finance, a calendar spread (also called a time spread or horizontal spread) is a spread trade involving the simultaneous purchase of futures or options expiring on a particular date and the sale of the same instrument expiring on another date. These individual purchases, known as the legs of the spread, vary only in expiration date; they are based on the same underlying market and str

A callable bull/bear contract, or CBBC in short form, is a derivative financial instrument that provides investors with a leveraged investment in underlying assets, which can be a single stock, or an index. CBBC is usually issued by third parties, mostly investment banks, but neither by stock exchanges nor by asset owners. It was first introduced in Europe and Australia in 2001, and it i

In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio. The model takes into account the asset's sensitivity to non-diversifiable risk (also known as systematic risk or market risk), often represented by the quantity beta (β) in t

Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as the ratio between the annual rental income produced by a real estate asset to its current market value. Most variations depend on the definition of the annual rental income and whether it is

Cash return on capital invested (CROCI) is an advanced measure of corporate profitability, originally developed by Deutsche Bank's equity research department in 1996 (it now sits within DWS Group). This measure compares a post-tax, pre-interest cash flow to the gross level of capital invested and is a useful measure of a company’s ability to generate cash returns on its investments.

A charge card is a type of credit card that enables the cardholder to make purchases which are paid for by the card issuer, to whom the cardholder becomes indebted. The cardholder is obliged to repay the debt to the card issuer in full by the due date, usually on a monthly basis, or be subject to late fees and restrictions on further card use. Charge cards are distinct from traditional c

In finance, a chooser option is a special type of option contract. It gives the purchaser a fixed period to decide whether the derivative will be a European call or put option.

A conditional variance swap is a type of variance swap or swap derivative product that allows investors to take exposure to volatility in the price of an underlying security but only while the underlying security is within a pre-specified price range. This instrument can be useful for hedging complex volatility exposures, making a bet on the volatility levels contained in the skew of th

A condor is a limited-risk, non-directional options trading strategy consisting of four options at four different strike prices. The buyer of a condor earns a profit if the underlying is between or near the inner two strikes at expiry, but has a limited loss if the underlying is near or outside the outer two strikes at expiry. Therefore, long condors are used by traders who expect the un

A constant maturity swap (CMS) is a swap that allows the purchaser to fix the duration of received flows on a swap.

Constant proportion portfolio investment (CPPI) is a trading strategy that allows an investor to maintain an exposure to the upside potential of a risky asset while

In corporate finance, Contingent Value Rights (CVR) are rights granted by an acquirer to a company’s shareholders, facilitating the transaction where some uncertainty is inherent. CVRs may be separately tradeable securities; they are occasionally acquired (or shorted) by specialized hedge funds.

A corporate action is an event initiated by a public company that brings or could bring an actual change to the debt securities—equity or debt—issued by the company. Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. For some events, shareholders or bondholders are permitted to vote on the event. Examples of corporate actions

The cost of carry or carrying charge is the cost of holding a security or a physical commodity over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the inst

In finance, a default option, credit default swaption or credit default option is an option to buy protection (payer option) or sell protection (receiver option) as a credit default swap on a specific reference credit with a specific maturity. The option is usually European, exercisable only at one date in the future at a specific strike price defined as a coupon on the credit default s

Cross-listing (or multi-listing, or interlisting) of shares is when a firm lists its equity shares on one or more foreign stock exchange in addition to its domestic exchange. To be cross-listed, a company must thus comply with the requirements of all the stock exchanges in which it is listed, such as filing.

A crossing network is an alternative trading system (ATS) that matches buy and sell orders electronically for execution without first routing the order to an exchange or other public displayed market such as an electronic communication network (ECN). Such crossing networks are a type of dark pool that employ computerized systems to match buyers and sellers of large blocks of shares with

The cyclically adjusted price-to-earnings ratio (CAPE, Shiller P/E, or P/E 10 ratio) is a stock valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings (moving average), adjusted for inflation. As such, it is principally used to assess likely future returns from equities over timescales of 10 to 20 years, w

In finance, a dark pool (also black pool) is a private forum (alternative trading system or ATS) for trading securities, derivatives, and other financial instruments. Liquidity on these markets is called dark pool liquidity. The bulk of dark pool trades represent large trades by financial institutions that are offered away from public exchanges like the New York Stock Exchange and the NA

A company's debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance the company's assets. Closely related to leveraging, the ratio is also known as risk ratio, gearing ratio or leverage ratio. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value

In derivatives trading, the term diagonal spread is applied to an options spread position that shares features of both a calendar spread and a vertical spread. It is established by simultaneously buying and selling equal amount of option contracts of the same type (call options or put options) but with different strike prices and expiration dates.

Direct market access (DMA) in financial markets is the electronic trading infrastructure that gives investors wishing to trade in financial instruments a way to interact with the order book of an exchange. Normally, trading on the order book is restricted to broker-dealers and market making firms that are members of the exchange. Using DMA, investment companies (also known as buy side fi

In finance, a dividend future is an exchange-traded derivative contract that allows investors to take positions on future dividend payments. Dividend futures can be on a single company, a basket of companies, or on an Equity index. They settle on the amount of dividend paid by the company, the basket of companies, or the index during the period of the contract.

The dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends:

The dividend yield of a share is the ratio of annualised cash dividends to the share's current market price. It is usually expressed as a percentage and is commonly calculated by dividing the annual dividend per share by the current share price.

Dupont analysis is a tool used in financial analysis, where return on equity (ROE) is separated into its component parts.

Earning yield is the quotient of earnings per share (E), divided by the share price (P), giving E/P. It is the reciprocal of the P/E ratio.

The economy monetization is a metric of the national economy, reflecting its saturation with liquid assets. The level of monetization is determined both by the development of the national financial system and by the whole economy. The monetization of economy also determines the freedom of capital movement. Economists have long recognized the important role played by the money supply. Nev

An energy derivative is a derivative contract based on (derived from) an underlying energy asset, such as natural gas, crude oil, or electricity. Energy derivatives are exotic derivatives and include exchange-traded contracts such as futures and options, and over-the-counter (i.e., privately negotiated) derivatives such as forwards, swaps and options. Major players in the energy derivati

Envy ratio, in finance, refers to the ratio of the price paid by investors to the price paid by the management team for their respective shares of equity.

In finance, an equity derivative is a class of derivatives whose value is at least partly derived from one or more underlying equity securities. Options and futures are by far the most common equity derivatives, however there are many other types of equity derivatives that are actively traded.

An equity-linked note (ELN) is a debt instrument, usually a bond issued by a financial institution such as an investment bank or a subsidiary of a commercial bank. ELNs are liabilities of the issuer, but the final payout to the investor is based on an unrelated company's stock price, a stock index or a group of stocks or stock indices. The underlying stocks typically have large market ca

The European Union tax haven blacklist, officially the EU list of non-cooperative tax jurisdictions, is a tool of the European Union (EU) that lists tax havens. It is used by the Member States to tackle external risks of tax abuse and unfair tax competition. It was adopted for the first time in 2017 as a response to tax avoidance in the EU, screening 92 countries. It is managed by the Co

Enterprise value/EBITDA (more commonly referred to by the acronym EV/EBITDA) is a popular valuation multiple used to determine the fair market value of a company. By contrast to the more widely available P/E ratio (price-earnings ratio) it includes debt as part of the value of the company in the numerator and excludes costs such as the need to replace depreciating plant, interest on debt

In finance, the expiration date of an option contract (represented by Greek letter tau, τ) is the last date on which the holder of the option may exercise it according to its terms. In the case of options with "automatic exercise", the net value of the option is credited to the long and debited to the short position holders.

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.

A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareh

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.

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).

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.

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

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

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

In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay to the lender or some third party. It is also distinct from dividend which is paid by a company to its share

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.

In the theory of capital structure, internal financing or self-financing is using its profits or assets of a company or organization as a source of capital to fund a new project or investment. Internal sources of finance contrast with external sources of finance. The main difference between the two is that internal financing refers to the business generating funds from activities and as

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

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

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.

In corporate finance, a listing refers to the company's shares being on the list (or board) of stock that are publicly listed. Some stock exchanges allow shares of a foreign company to be listed and may allow dual listing, subject to conditions.

The loan-to-value (LTV) ratio is a financial concept used by lenders to express the ratio of a loan to the value of an asset purchased.

A local volatility model, in mathematical finance and financial engineering, is an option pricing model that treats volatility as a function of both the current asset level

A market anomaly in a financial market is predictability that seems to be inconsistent with (typically risk-based) theories of asset prices. Standard theories include the capital asset pricing model and the Fama-French Three Factor Model, but a lack of agreement among academics about the proper theory leads many to refer to anomalies without a reference to a benchmark theory (Daniel and

In finance, market data is price and other related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders and investors to know the latest price and see historical trends for instruments such as equities, fixed-income products, derivatives, and currencies.

In finance, market depth is a real-time list displaying the quantity to be sold versus unit price. The list is organized by price level and is reflective of real-time market activity. Mathematically, it is the size of an order needed to move the market price by a given amount. If the market is deep, a large order is needed to change the price.

A market maker or liquidity provider is a company or individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the bid–ask spread or turn. This stabilizes the market, reducing price variation (volatility) by setting a trading price range for the asset.

Net volatility refers to the volatility implied by the price of an option spread trade involving two or more options. Essentially, it is the volatility at which the theoretical value of the spread trade matches the price quoted in the market, or, in other words, the implied volatility of the spread.

An odd lotter is an investor who purchases shares or other securities in small or unusual quantities. Stocks are typically traded in increments of 100 shares, a quantity known as a round lot or board lot. The cost of 100 shares of a security may be beyond the means of an individual investor, or may represent a larger investment than the investor wishes to make. Thus, the investor purcha

Open outcry is a method of communication between professionals on a stock exchange or futures exchange, typically on a trading floor. It involves shouting and the use of hand signals to transfer information primarily about buy and sell orders. The part of the trading floor where this takes place is called a pit.

In business, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS) - is the ratio of operating income ("operating profit" in the UK) to net sales, usually expressed in percent.

An operating partner is a title used by venture capital (VC) and private equity (PE) firms to describe a role dedicated to working with privately held companies to increase value. The role was created by large-capitalization private equity groups when the importance of driving corporate change to add value increased as sellers became more sophisticated and financial engineering less cent

An order book is the list of orders (manual or electronic) that a trading venue (in particular stock exchanges) uses to record the interest of buyers and sellers in a particular financial instrument. A matching engine uses the book to determine which orders can be fully or partially executed.

The following outline is provided as an overview of and topical guide to corporate finance:

Over-the-counter (OTC) or off-exchange trading or pink sheet trading is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price. In an OTC trade, the price is not necessarily pub

The price-to-book ratio, or P/B ratio, (also PBR) is a financial ratio used to compare a company's current market value to its book value (where book value is the value of all assets minus liabilities owned by a company). The calculation can be performed in two ways, but the result should be the same. In the first way, the company's market capitalization can be divided by the company's t

A pairs trade or pair trading is a market neutral trading strategy enabling traders to profit from virtually any market conditions: uptrend, downtrend, or sideways movement. This strategy is categorized as a statistical arbitrage and convergence trading strategy. Pair trading was pioneered by Gerry Bamberger and later led by Nunzio Tartaglia's quantitative group at Morgan Stanley in the

In finance, partial return reverse swap (PRRS) is a type of derivative swap, a financial contract that transfers a percentage of both the credit risk and market risk of an underlying asset, usually half, while also transferring all of the ownership liabilities for estate planning, tax purposes, and insider trading rules.

The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth.

A perpetual bond, also known colloquially as a perpetual or perp, is a bond with no maturity date, therefore allowing it to be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the principal. Perpetual bond cash flows are, therefore, those of a perpetuity.

Pin risk occurs when the market price of the underlier of an option contract at the time of the contract's expiration is close to the option's strike price. In this situation, the underlier is said to have pinned. The risk to the writer (seller) of the option is that they cannot predict with certainty whether the option will be exercised or not. So the writer cannot hedge their position

The Pooled Income Fund (PIF) is a type of charitable mutual fund or charitable trust that pools the securities or cash separately donated by an individual, a family or a corporation to a charity, which is then invested to provide dividends for both the donor's beneficiary and charity. The donations are irrevocable and tax-deductible and must be from personal assets. Capital gains taxes d

In corporate finance,

In economics and finance, the price discovery process (also called price discovery mechanism) is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers.

The price/cash flow ratio (also called price-to-cash flow ratio or P/CF), is a financial ratio used to compare a company's market value to its cash flow. It is calculated by dividing the company's market cap by the company's operating cash flow in the most recent fiscal year (or the most recent four fiscal quarters); or, equivalently, divide the per-share stock price by the per-share ope

The price–earnings ratio (P/E ratio, P/E, or PER) is the ratio of a company's share price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued.

The price-to-sales ratio (P/S ratio or PSR) is a financial ratio used to assess a company's market value relative to its revenue. It is calculated by dividing the company's market capitalization by its total revenue over a specified period, typically the trailing twelve months (TTM), or equivalently, by dividing the unit price of each share by the per-share revenue. Investors use this me

The primary market is the part of the capital market that deals with the issuance and sale of securities to purchasers directly by the issuer, with the issuer being paid the proceeds. A primary market means the market for new issues of securities, as distinguished from the secondary market, where previously issued securities are bought and sold. A market is primary if the proceeds of sal