B

Balance sheet hedging

A balance sheet hedging technique involves using financial instruments to offset potential losses or gains on the balance sheet of a company. Companies typically use it to protect themselves against adverse movements in foreign exchange rates, interest rates, or commodity prices, which can affect the value of their assets and liabilities.

Base currency

The base currency is the primary currency that is used to quote prices for financial instruments, such as currency pairs in the foreign exchange market. It is also the currency in which financial statements, such as balance sheets and income statements, are typically reported.

Bid

Bids are offers made by buyers to purchase securities at a specified price. In an auction-style market, such as a stock exchange, bids are made by buyers who want to purchase securities, and offers (also called "asks") are made by sellers who want to sell them. "Bid-ask spread" refers to the difference between prices at which buyers and sellers are willing to buy at a particular moment. Bid prices are typically lower than ask prices, and spreads are the difference between them.

Bill of Landing

A Bill of Lading (B/L) is a document used in shipping to acknowledge the receipt of goods and to serve as proof of title. The B/L is issued by the carrier (such as a shipping company or a trucking firm) and lists the type, quantity, and destination of the goods being transported. It also serves as a contract between the carrier and the shipper, setting out the terms and conditions of the shipment.

Basis Points (bps)

Basis points are used to measure a percentage change in a financial instrument's value or rate. One basis point is equal to 1/100th of 1% or 0.01%, which is used to express very small changes in value. A basis point represents a very small percent change in an easy-to-understand manner and is often used to describe changes in interest rates, yields, and other financial metrics. 

Bond

A bond is a debt security issued by a government, municipality, or corporation for the purpose of raising capital. An investor who purchases a bond is essentially lending money to the issuer in return for interest payments and the return of principal at maturity. Companies and governments often use bonds to finance long-term projects and to smooth out their cash flow. Bonds come in many types, including corporate, municipal, and government bonds. 

Binary Option

Binary options are financial instruments that allow speculating on the movement of various assets, such as stocks, commodities, currencies, and indices. It is called a binary option because the outcome is either a fixed payout or a loss.

Broken Date

Broken dates refer to contracts and financial instruments that have a non-standard or irregular tenor, or length of time until maturity. It is possible to use broken dates in a variety of financial instruments, such as bonds, loans, and derivatives.

Butterfly Option

The butterfly option is a type of option strategy that involves combining two vertical spreads, which each have four different options with three different strike prices. This strategy takes advantage of a neutral market environment, where the underlying asset's price is expected to remain stable. It involves purchasing two call options at a lower strike price, two put options at a higher strike price, and selling one call option and one put option at the same middle strike price.

Budget rate

In the context of foreign exchange (FX), a budget rate is a financial projection that estimates the expected exchange rate for a particular currency pair at a future point in time. It is used to help plan and manage resources for international transactions, and to ensure that the costs of the transactions are within the allocated budget.

Blocked currency Block currencies are effectively non-convertible or inconvertible. Generally, currencies are blocked because of government restrictions, such as foreign exchange regulations, physical barriers, political sanctions, or extremely high volatility.

Barrier option

A barrier option is a type of derivative where the payoff depends on whether or not the underlying asset has reached or exceeded a predetermined price. A barrier option can be a knock-out, or a knock-in.