F

Federal Funds Rate

The federal funds rate is the interest rate at which banks lend and borrow overnight balances from each other, known as federal funds, in the U.S. The federal funds rate is an important benchmark for short-term interest rates in the U.S. financial market, and is used as a reference rate for various financial products, such as adjustable-rate mortgages, credit card loans, and small business loans.

Fintech

The term fintech refers to the use of technology to provide financial services. It can include everything from robo-advisors to mobile banking apps. Fintech is constantly evolving and has the potential to disrupt traditional financial systems by providing more efficient and accessible financial services.

Floor

In finance, a floor refers to a minimum that cannot be dropped below. An interest rate floor means that a loan is not subject to any other contingent interest rates. Regardless of market conditions, a price floor prevents an item's price from falling below a certain limit.

Forward Points

Forward points in finance refers to the amount added to or subtracted from the current spot rate of a currency to determine the forward exchange rate for a future delivery date. The forward exchange rate determines the rate at which a currency can be exchanged for another at a future date, based on an agreement made on the spot date. In addition to accounting for the time value of money, forward points are used to correct for differences in interest rates between the currencies being exchanged. The size of the forward point will depend on the difference between the interest rates of the two currencies and the time until the forward contract is set to expire.

Foreign exchange (FX)

Foreign exchange (FX) refers to the buying and selling of currencies on the foreign exchange market. The foreign exchange market is a global decentralized market for the trading of currencies, and is the largest financial market in the world.

Foreign exchange (FX) option 

A foreign exchange (FX) option is a financial contract that gives the holder the right, but not the obligation, to buy or sell a specified currency at a predetermined exchange rate on or before a certain date. It is a type of derivative instrument that is used to hedge against the risk of fluctuations in exchange rates.

Foreign Exchange (FX) Hedging

FX hedging is a risk management strategy used by companies to protect themselves from potential losses resulting from changes in currency exchange rates. FX hedging involves buying and selling financial instruments, such as forwards, options, and futures, to offset potential currency exposures in order to minimize the impact of exchange rate fluctuations on a company's financial statements. The goal of FX hedging is to reduce or eliminate the risk of loss due to currency movements, allowing companies to better manage their financial risk and focus on their core business operations.

Foreign Exchange (FX) Swap

An FX swap is a foreign exchange derivative that allows two parties to exchange an agreed amount of one currency for another currency at a specified rate, on a specified date, and then reverse the trade at a later date. The two legs of the trade are carried out simultaneously for a fixed amount of time, and then reversed later. FX swaps are usually used to hedge currency risk or obtain financing in a different currency. FX swaps are commonly used by banks and other financial institutions, but are also used by companies and individuals to manage their foreign exchange exposures.

Foreign exchange (FX) risk - exchange rate risk Foreign exchange (FX) risk is the risk that a company or investor will incur losses due to fluctuations in exchange rates. It is a type of market risk that can impact the value of assets, liabilities, and cash flows denominated in different currencies.

Forward 

Forwards are financial derivatives that allow two parties to exchange assets at a specified price at a specific future date. Contracts are customized to the needs of the parties involved, and terms include the type of asset, the quantity of the asset, and the delivery date. Forwards are often used to hedge against currency risk, commodity price risk, or interest rate risk. In a forward contract, one party agrees to buy the asset at the agreed-upon price on a specific date from the other party. The other party agrees to sell the asset at that price on that date. The forward contract is not traded on an exchange, and the terms of the contract are not standardized. The terms are negotiated between the two parties, and the contract is usually customized to meet their specific needs. Although forward contracts are similar to futures contracts, they differ in some important ways. A futures contract is standardized and traded on an exchange, whereas a forward contract is customized and traded over the counter. Additionally, futures contracts have margin requirements and are marked to market daily, whereas forwards do not.

Foreign Exchange (FX) forward contract

FX forwards are contracts between clients and their bank, or non-bank provider, to exchange currencies at a set rate on a future date. Contract pricing is determined by the exchange spot price, interest rate differentials between the two currencies, and the length of the contract, which is determined by the buyer and seller.

Future

Futures contracts are financial derivatives that obligate the buyer or seller to purchase or sell an asset at a predetermined price at a future date. The terms of futures contracts, including the quantity and quality of the assets, the delivery date, and the price, are all determined in advance. Futures contracts are standardized and traded on exchanges. Futures contracts are used to hedge against price risk, or to speculate on the price movements of an asset. The buyer and seller of a futures contract are required to put up a margin, which is a small percentage of the value of the contract. The margin is used to cover any potential losses on the contract. 

Functional currency

A functional currency is the currency of the primary economic environment in which an entity operates. It is the currency in which an entity primarily generates and expends cash, and the currency in which it primarily holds assets and liabilities. For a business, the functional currency is typically the currency of the country in which the business is headquartered. The functional currency is used to determine the appropriate exchange rate to use when translating the financial statements of an entity into a different currency. The functional currency is also known as accounting currency.

FX Translation Currency translation is the process of converting one currency in terms of another, often in the context of the financial results of a parent company's foreign subsidiaries into its functional currency.

FX Swap

In a foreign currency swap, two foreign parties agree to swap interest payments on a loan made in one currency for interest payments on a loan made in another currency. Foreign currency swaps can also involve exchanging principal. When the agreement ends, this will be exchanged back. In most cases, however, notional principal is just used to calculate interest and is not actually exchanged.

Floating Exchange Rate In a floating exchange rate system, the currency price of a nation is set according to supply and demand relative to other currencies. A fixed exchange rate, on the other hand, is determined entirely or predominantly by the government.

FX Forward Transaction The FX Forward Deal is a foreign exchange transaction based on a foreign exchange rate agreed by the buyer and seller under a foreign exchange contract, delivered on a specified date after the second working day of the transaction, in most cases.

FX Netting Netting FX (or Forex Netting ) involves offsetting receivables and payables in one currency with receivables and payables in the same currency. As currency rates move, FX gains (losses) on one position should be offset by FX losses (gains) on the other.

Foreign Transaction Fee A foreign transaction fee is a charge assessed by a financial institution to a consumer who uses an electronic payment card to make a purchase in a foreign currency. Foreign transaction fees usually apply to card purchases made in foreign countries while traveling, but they can also apply to purchases made online from your home country where the vendor is foreign and processes the transaction in its local currency.

FX Gain / FX Loss

An FX gain or loss is reflected in the income statement as a change in value of a foreign exchange-denominated transaction. A sales transaction creates a foreign exchange gain (loss) when the foreign currency appreciates (depreciates) against the company's home currency.

Fedwire Fedwire is a real-time gross settlement funds transfer system operated by the United States Federal Reserve Banks that allows financial institutions to transfer funds electronically between the system's more than 9,289 participants (as of March 19, 2009). Upon receiving the proper wiring instructions from the receiving bank, the sending bank can initiate transfers.