Basis Point Value

Basis Point Value

Basis Point Value

Basis points represent a unit employed to measure interest rates and other financial percentages. A basis point equals 1/100th of a single percentage point. It can be denoted as 0.01% or 0.0001 in decimal form. (more…)
Cash and Carry Arbitrage

Cash and Carry Arbitrage

Cash and Carry Arbitrage

Arbitrage is a practice of taking benefit of price differences between two markets. A market-neutral strategy that combines purchasing of a long position in an asset such as stock or commodity and the sale of a position in the futures market on the same underlying asset is known as cash and carry arbitrage. In Cash and carry arbitrage, a trader takes the benefit of price differences between an asset and its derivative in different markets. (more…)
Auction Market

Auction Market

Auction Market

A market in which buyers indicate the highest price they are willing to pay and sellers indicate the lowest price they are willing to accept is known as the auction market. Basically, it is a security exchange in which buyers make a bid and sellers make an offer in order to make it. In simple terms, an auction market is a place where buyers and sellers make competitive bids simultaneously. (more…)
Euroclear System

Euroclear System

Euroclear System

Euroclear System is a clearinghouse that settles and clears securities trades executed on European exchanges. It is one of the two principal securities clearinghouses in the Eurozone. It is a Belgium-based financial service,  specialized in verifying information supplied by brokers in security transactions and the settlement of securities transacted on the European Exchange. (more…)
Trade Life Cycle

Trade Life Cycle in Capital Markets

Trade Life Cycle in Capital Markets

In simple terms, “Trade” refers to the process of Buying or Selling, or Exchanging the product. In the financial market, “Trade” means Buying or selling financial products such as securities. Technically, trade is the conversion of orders placed on the exchange. This results in pay-in or pay-off of securities and funds. (more…)
FALLEN ANGEL

Fallen Angel

FALLEN ANGEL

What Is Fallen Angel The fallen angel is a term used in finance to describe an organization that was given an investment-grade status but due to its declining financial condition, the organization had been reduced to junk bond status. The fallen angel is also used to describe stocks whose price has been reduced drastically from the all-time high position. (more…)
Gilt-Edged Securities

Gilt-Edged Securities

Gilt-Edged Securities

Gilt-edged securities are high-grade bonds that are issued by some national governments and private organizations issue to generate revenue. As the name suggests, gilt-edged securities refer to high-quality items whose value remains more or less constant over time.

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Basket Option

Basket Option

Basket Option

A basket option is a type of financial derivative of which the underlying asset is a “basket” of commodities, securities, and currencies. Basket options are normally settled in cash. Basket options know as Multifactor Option, their payoff depends on the performance of underliers. Basket options trade in the OTC market and therefore can be customized based on the buyer and seller's needs. (more…)
Investment Securities

Investment Securities

Investment Securities

Investment securities are financial assets that are tradable in financial markets such as equities and fixed income instruments. These are purchased to hold them for a longer period of investment. This is in contrast to securities that are purchased by broker-dealer or other financial intermediately for resale short-term speculations. Investment securities are subject to governance via article 8 of the Uniform Commercial Code (UCC). (more…)