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KNOWLEDGE BASE

Grain Glossary

Get an overview of financial terms and their definitions.

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  • T

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z T Take Rate A take rate is the fee that a marketplace charges for a transaction that is carried out by a third-party seller or service provider. The take rate is a determining factor in a marketplace's revenue as reported on its income statement: Take rate * GMV (gross merchandise volume) = revenue. Tenor Tenor refers to the time between the maturity date and the maturity date of a financial instrument, such as a bond or loan. The tenor of a financial instrument can be expressed in various ways, such as years, months, or even days. Theta In finance, theta is a measure of an option's sensitivity to time-based changes in price. The Greek letter used in options pricing formulas to represent the amount by which the price of an option is expected to decline over a given period of time, due to the passage of time and the decay of the option's extrinsic value.Theta is typically expressed as a negative number, and it reflects the impact that the passage of time can have on the value of an option. Tick Ticks are units of measurement that represent the minimum price change for a security. Ticks are commonly used for expressing changes in a financial instrument's price, such as a stock, bond, commodity, or derivative, and they represent the smallest increment in a security's price. The value of a tick can vary depending on the security being traded and the market in which it is traded, but it is typically very small. For example, in the stock market, a tick may be equal to one cent for some stocks and $0.01 for others. Ticks are often used by traders and investors to track the performance of a security and to make decisions about buying and selling. Treasury bill (T-bill) T-bills are short-term debt securities issued by the U.S. government. T-bills are sold in denominations ranging from $100 to $1,000,000, and their maturities range from a few days to 52 weeks. Since T-bills are backed by the full faith and credit of the United States government, they are considered to be very safe investments. Investors often use them to park money or diversify their portfolios for a short period of time. T-bills do not pay interest, but they are sold at a discount to their face value, and the difference between the purchase price and the face value represents the return to the investor. T-bills are issued through competitive and noncompetitive bidding processes. Transaction Exposure Transaction exposure is the potential loss a company may incur due to changes in foreign exchange rates on existing financial obligations or expected future cash flows. Companies can use a variety of financial instruments and strategies to manage transaction exposure. Transaction exposure is also known as economic exposure. Trader A trader is a person who buys and sells financial instruments such as stocks, bonds, currencies, commodities, or derivatives in an attempt to make a profit. Traders can work on their own or as part of a larger financial institution, such as a bank or brokerage firm. Translation Exposure / Transaction Risk The translation exposure (also known as the translation risk) is the possibility that an organization's assets, liabilities, or income will change in value as a result of changes in exchange rates. Translation risk occurs when a company has equities, assets, liabilities, or income denominated in a foreign currency. < PREVIOUS NEXT >

  • O

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z O OECD The Organisation for Economic Co-operation and Development (OECD) is an international organization that promotes economic and social well-being around the world. It was founded in 1961 and is headquartered in Paris, France. The OECD is made up of 36 member countries, which are primarily developed countries, but also include a few emerging economies. Offer An offer is a proposal from a seller to sell a product or service at a specified price. In securities trading, an offer is often expressed as an "ask," which is the price at which a seller is willing to sell a particular security. In an auction-style market, such as a stock exchange, offers are made by sellers and paired with bids made by buyers. The lowest ask and the highest bid at a given time make up the "bid-ask spread," which is the difference between the prices at which buyers are willing to buy and sellers are willing to sell. The ask price is typically higher than the bid price, and the difference between the two is called the "spread." Option Options are financial instruments that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date. A call option gives the holder the right to buy the underlying asset; a put option gives the holder the right to sell the underlying asset. Options are often used to hedge against potential price movements in other assets, or to speculate on price movements. Off the Run In finance, "off the run" refers to securities that have not been issued most recently. In the case of government bonds issued every year, for example, the most recently issued bond would be considered "on the run," but all previous bonds would be considered "off the run." Due to their limited trading, off-the-run securities are usually considered less liquid than on-the-run securities. On the Run "On-the-run" is a term used in the bond market to refer to the most recently issued bonds in a particular series or issuer. On-the-run bonds are typically the most liquid and widely traded bonds in a given market, and they are usually considered to be the benchmark or reference bonds for that market. Out Off The Money (OTM) In finance, an option is considered to be out of the money if the current market price of the underlying asset is lower than the strike price for a call option, or higher than the strike price for a put option. Out-of-the-money options have no intrinsic value, because the holder of the option is not entitled to buy or sell the underlying asset at a price that is different from the current market price. Over The Counter Market (OTC) The OTC (over-the-counter) market is a decentralized market where financial instruments are traded directly between two parties without a central exchange. Alternatively, it is known as the "off-exchange" market. The OTC market is typically facilitated by market makers, who act as intermediaries between buyers and sellers and help match buyers and sellers. Over Hedged Risk management strategy over-hedging involves taking an offsetting position that exceeds the size of the original position being hedged. It may result in a net position opposite to the initial position. Overhedging can be inadvertent or intentional. Option Currency Trading Currency options are derivatives based on underlying currency pairs. Trading currency options involves a wide variety of strategies available for use in FX markets, where foreign currencies are traded. < PREVIOUS NEXT >

  • U

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z U.S. Dollar Index U.S. Dollar Index measures the dollar's value relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. < PREVIOUS NEXT >

  • G

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z G Gamma A gamma is a measure of how sensitive the delta of an option is to changes in the price of the underlying asset, used in options pricing formulas to represent the amount by which the delta of an option is expected to change in response to a $1 change in the price of the underlying asset. Gamma is typically expressed as a decimal number, and it reflects the impact that changes in the price of the underlying asset can have on the delta of an option. Government Bond A government bond is a debt security issued by the government to raise capital. Due to the fact that government bonds are backed by the full faith and credit of the issuing government, they are considered a safe investment. Greeks in Finance Variables used to assess risk in the options market are commonly referred to as "the Greeks." A Greek symbol represents each risk. Greek variables result from imperfect assumptions or relationships between the option and another underlying variable. Greek values, such as delta, theta, and others, are used by traders to assess options risk. G10 Currencies The G10 currenc ies are a group of selected major currencies that are used in international marketplaces. The name of the group originated from a meeting of finance ministers from the G10 nations on the 10th of September of 1975. The G10 currencies are: United States Dollar (USD), Euro (EUR), Pound Sterling (GBP), Japanese Yen (JPY), Australian Dollar (AUD), New Zealand Dollar (NZD), Canadian Dollar (CAD), Swiss Franc (CHF), Norwegian Krone (NOK), Swedish Krona (SEK). < PREVIOUS NEXT >

  • R

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z R Repurchase Agreement (REPO) Repo transactions involve one party selling securities to another with the agreement to buy them back later at a higher price. Often, repos are used to raise short-term capital or finance the purchase of securities. There are two types of repos: term repos, which have a fixed maturity date, and open repos, which have no fixed maturity date and can be terminated at any time. A repos is most commonly used by banks, hedge funds, and other financial institutions as a way to raise short-term capital, and they are considered a low-risk investment because they are usually secured with high-quality securities. Real-time gross settlement (RTGS) Real-time gross settlement (RTGS) systems are specialist funds transfer systems that allow money or securities to be transferred from one bank to another in real time and on a gross basis to avoid settlement risk. When a payment transaction is settled "in real time," there is no waiting period. Transactions are settled as soon as they are processed. The term "gross settlement" means the transaction is settled one-to-one, without bundling or netting with any other transaction. "Settlement" refers to payments that are final and irrevocable once processed. Reverse Repurchase Agreement (Rev REPO) A reverse repo is a financial transaction where one party purchases securities from another party and then sells them back at a lower price at a later date. Like regular repos, reverse repos can be either term repos or open repos, depending on whether they have a fixed maturity date. Reverse repos are typically used by banks, hedge funds, and other financial institutions as a way to invest short-term excess cash or to finance the purchase of securities. Rho Rho is a measure of the sensitivity of an option's price to changes in the risk-free interest rate. It is a Greek letter used in options pricing formulas to represent the amount by which the price of an option is expected to change in response to a 1% change in the risk-free interest rate. Rho is typically expressed as a percentage, and it reflects the impact that changes in the risk-free interest rate can have on the value of an option. Risk Reversal Risk reversals are financial transactions in which two parties exchange risk. It is generally used to hedge against or speculate on changes in the value of an underlying asset. One common type of risk reversal is an options strategy that involves the simultaneous purchase of a put option and the sale of a call option on the same underlying asset. This strategy is also known as a short straddle or a short combination. The put option gives the holder the right to sell the underlying asset at a predetermined price (the strike price), while the call option gives the holder the right to buy the underlying asset at the same strike price. Run on the Bank A run on the bank is a situation where a large number of depositors attempt to withdraw their money from a bank at the same time due to concerns about the bank's solvency or financial stability. This can be triggered by rumors or actual news of the bank's financial difficulties or instability. A run on the bank can have serious consequences, as it can lead to the bank's inability to fulfill the withdrawal requests of its depositors, resulting in a liquidity crisis that can spread to other banks and the wider financial system. In some cases, governments or central banks may step in to provide support and prevent a wider financial crisis. Profit Repatriation The repatriation of profits means that a firm can send earnings or assets from abroad back to its home country in hard currency such as USD, EUR, and others. Rolling Option A rolling option is an options contract that grants a buyer the right to purchase something at a future date, as well as the choice to extend the expiration date of that right, for a fee. < PREVIOUS NEXT >

  • B

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z 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. < PREVIOUS NEXT >

  • M

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z M Market Maker A market maker is a firm or individual that buys or sells securities at any time with the goal of providing liquidity to the market and facilitating trade. Market makers typically hold an inventory of securities that they buy and sell, and they provide quotes to buyers and sellers using their capital and liquidity. Market makers play a crucial role in facilitating price discovery and trade execution by providing a source of demand and supply for securities. Market makers may operate on exchanges or in the over-the-counter (OTC) market. Market Taker A market taker buys or sells securities by accepting the price quoted by market makers or other traders. By contrast to market makers, who can buy and sell securities at any time and provide quotes to the market, market takers are passive participants who rely on quotes provided by others in order to execute trades. Market takers do not provide liquidity to the market in the same way that market makers do, but they can benefit from the liquidity provided by market makers and other traders by being able to quickly and easily buy and sell securities at quoted prices. Market takers may also be referred to as "buyers" and "sellers," depending on whether they are buying or selling securities. Major currency A major currency is a term used to describe a currency that is widely traded and used in international transactions. Major currencies are typically from economically and politically stable countries, and are considered to be relatively liquid and stable compared to other currencies. Mark to Market Mark to market (MTM) is a method of measuring the fair value of accounts that can fluctuate over time, such as assets and liabilities. Mark to market aims to provide a realistic appraisal of an institution's or company's current financial situation based on current market conditions. Monetary Assets A monetary asset is one that is readily convertible into money, such as cash on hand, bank deposits, investment accounts, accounts receivable (AR), and notes receivable. Midmarket Exchange Rate The midmarket exchange rate (sometimes called the interbank or middle rate) is the midpoint between any two currencies' buy and sell prices. As the demand for and supply of a currency is constantly changing, the mid-market rate is also constantly changing. Managed floating exchange rate A managed floating exchange rate, or "dirty float," blends elements of fixed and floating rates. Central banks, like China's, intervene to keep the currency within a set range against others, such as the USD, with daily fluctuations capped at 2%. This system helps prevent extreme currency misvaluations. For credibility, it relies on a central bank with ample reserves and a market-aligned exchange rate corridor. < PREVIOUS NEXT >

  • C

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z C Cash flow hedge A cash flow hedge is a type of hedge that is used to protect against potential losses or gains on a company's future cash flows. It involves using financial instruments, such as derivatives, to offset the impact of changes in foreign exchange rates, interest rates, or commodity prices on the value of the company's cash flows. Consumer Price Index (CPI) Consumer Price Index (CPI) measures the average price level of a basket of goods and services consumed by households. The Consumer Price Index (CPI) is a critical indicator of pricing pressures in an economy and provides a gauge of inflation. Forex traders monitor the CPI, as it can lead to changes in monetary policy by the central bank that will either strengthen or weaken the currency against others in the markets. Collateral In the context of foreign exchange (FX), collateral refers to assets that are pledged as security for a financial obligation, such as a loan or a derivative contract. Collateral is often used in FX transactions to reduce the risk of default by one of the parties. Collateral can be used in other types of FX transactions as well, such as currency forwards, options, and non-deliverable forwards. In these cases, the collateral may be used to cover the potential risk of loss due to changes in exchange rates or other market conditions. Commodity Commodities are raw materials or primary agricultural products that can be bought and sold, such as copper, oil, wheat, gold, etc. Because commodities are standardized products with little differentiation between their qualities, they can be interchanged with other commodities of the same type. They are often produced and traded in large quantities and can be used as inputs for further production or as sources of energy. Calendar Spread A calendar spread, also called a time spread or a horizontal spread, involves simultaneously buying and selling options on the same underlying asset but with different expiration dates. Calendar spreads aim to profit from differences in option time decay. Call Option Call options are financial contracts that give the holder the right, but not the obligation, to buy a specific asset at a predetermined price (the strike price) before or on a certain date (the expiration date). The underlying asset is the asset that the call option gives the holder the right to purchase. Call Spread The call spread is an option strategy where one call option is purchased and another call option is simultaneously sold on the same underlying asset. Call options have different strike prices, and the option that is purchased has a lower strike price than the option that is sold. Call spreads are designed to profit from an upward move in the price of the underlying asset while limiting losses. CAPS Caps are financial contracts used to hedge against currency fluctuations, similar to options. By using it, a currency's upside potential is limited while the holder benefits from its potential depreciation. The holder of a cap has the right to buy or sell a currency, but is not obligated to do so, at a specific strike price, on a specific date or period of time. A cap rate is the strike price that determines a currency's maximum rate. Credit Default Swap (CDS) Credit default swaps (CDS) are financial derivatives that are used to transfer credit risk from one party to another. A CDS provides protection against the risk of debt default by the issuer. Cross rate In the context of foreign exchange (FX), a cross rate is the exchange rate between two currencies, both of which are not the official currency of the country in which the exchange rate quote is given. It is calculated by using the exchange rates of the two currencies relative to a third currency, which is typically a more widely traded currency such as the US dollar. Cross border payment A cross border payment is a financial transaction that involves the transfer of money between countries, typically in different currencies. Cross border payments can be made for a variety of purposes, such as to pay for goods or services, to transfer money to or from foreign bank accounts, or to make international wire transfers. There are a number of factors to consider when making a cross border payment, such as exchange rates, fees, and regulatory requirements. Cross border trade As defined by the OCDE, cross-border trade is the exchange of goods and services between residents and non-residents. It is measured in USD as a percentage of GDP for net trade (exports minus imports) and also in annual growth for imports and exports. Convertible Bond Convertible bonds are bonds that can be converted into shares of the issuer's stock or another security at the holder's discretion. Convertible bonds are a hybrid security that combine the features of both bonds and stocks. They offer the stability and regular income of a bond, as well as the opportunity to participate in the company's potential growth. Corporate Bond Corporate bonds are debt securities issued by corporations to raise capital. There are a variety of maturities available for corporate bonds, ranging from a few months to more than 30 years. The bondholder receives periodic interest, known as a coupon, and the principal is returned at maturity. Currency forward (FX forward) A currency forward is a financial contract that involves the exchange of two currencies at a predetermined exchange rate on a future date. It is a type of derivative instrument that is used to hedge against the risk of fluctuations in exchange rates. Currency hedging Currency hedging is the practice of using financial instruments or strategies to reduce the risk of losses due to fluctuations in foreign exchange rates. It is a common risk management strategy for companies and investors with international operations or exposures, as it can help to protect against the impact of currency fluctuations on the value of their assets, liabilities, and cash flows. Currency volatility Currency volatility refers to the fluctuations in the value of a currency relative to other currencies. It is a measure of the risk associated with holding or trading assets in a particular currency, and is an important consideration for companies and investors with international operations or exposures. Currency exposure Currency exposure refers to the potential impact of changes in foreign exchange rates on the value of a company's assets, liabilities, and cash flows. It is a measure of the extent to which a company is exposed to risk from movements in foreign exchange rates. A company with significant foreign currency exposure may be at risk of losses due to changes in exchange rates, which can impact the value of its assets and liabilities, as well as the cash flows from its international operations. Currency depreciation Currency depreciation occurs when the value of a currency falls against other currencies. The depreciation of currencies can be caused by economic fundamentals, interest rate differentials, political instability, or investor risk aversion. Currency convertibility In terms of foreign transactions, currency convertibility refers to the ability to exchange one currency for another at a given conversion rate. A range of degrees of convertibility can be identified, ranging from total convertibility to total inconvertibility. Convertible currency A currency is said to be freely convertible when it has an immediate value on the different international markets, and few restrictions on the manner and amount that can be traded for another currency . Free convertibility is a major feature of a hard currency. Cross currency triangulation In cross currency triangulation, monetary amounts are first converted from one national currency unit (source currency) into an intermediate currency (anchor currency). Calculation then converts the intermediate currency amount into the designated national currency unit (target currency). Cash Collection In cash collection, companies recover money from other businesses (or individuals) to whom they have previously provided invoices. Cash collection primarily aims to get invoices paid by the due date. Currency controls Currency controls (or exchange controls) limit the purchase and/or sale of currencies by governments. By limiting inflows and outflows of currency, these controls help countries stabilize their economies. Exchange controls are not available to every nation, at least not legitimately; the 14th article of the IMF's Articles of Agreement only permits their use in transitional economies. < PREVIOUS NEXT >

  • A

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z A At The Money (ATM) In finance, an option is at the money if the current market price of its underlying asset equals its strike price. Because the underlying asset cannot be bought or sold at a price other than the current market price, at-the-money options have no intrinsic value. Accounts payable A company's accounts payable is the amount of money it owes to its creditors for goods or services it has received, but has not yet paid for. In the context of accounting, accounts payable is classified as a liability, as it represents a company's obligation to pay off its debts. It is recorded in a company's balance sheet under the category of current liabilities, along with other debts and financial obligations that are due within the next year. Appreciation in Currency A currency appreciation in the currency market refers to an increase in the value of one currency relative to another. Simultaneously, the currency appreciation benefits importers as they have to pay less in domestic currency for imported goods. Alt 21 Alt 21 is a digital financial platform designed to let individuals and businesses hedge currency risks. The company's platform offers customizable forex hedging software including options and forwards with real-time rates for pricing in multiple currencies, enabling banks, credit unions, and corporate treasury departments to automate their forex hedging processes and deliver tailor-made financial services. Actual/360 A day count convention is used for calculating interest accrued on Treasury bills and other money market instruments . Uses actual number of days in a month and 360 days in a year for calculating interest payments. < PREVIOUS NEXT >

  • V

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z V Value at Risk (VaR) Value at Risk (VaR) measures the risk of loss on an investment or portfolio over a specified period. Based on the performance of the investment or portfolio over a given period, it estimates the likelihood of a loss of a certain magnitude over a given period. VaR is typically expressed as a dollar amount or as a percentage of the total value of the investment or portfolio. Vega In finance, vega measures how sensitive an option price is to changes in the volatility of the underlying asset. It is a Greek letter used in options pricing formulas to represent the amount by which the price of an option is expected to change in response to a 1% change in the volatility of the underlying asset. Vega is typically expressed as a percentage, and it reflects the impact that changes in volatility can have on the value of an option. Volatility In finance, volatility refers to the amount of risk or uncertainty associated with the price of a security. It is a measure of how much the price of a security, such as a stock or bond, fluctuates over time. A security with high volatility experiences significant price changes over a short period of time, while a security with low volatility experiences less significant price changes. Volatility can be measured using a variety of statistical techniques, such as standard deviation or the variance of returns. Volatility Surface In finance, a volatility surface is a graphical representation of the implied volatilities of a group of options on a particular underlying asset, as a function of the options' expiration dates and strike prices. The volatility surface is used to help visualize the relationships between the implied volatilities of options with different expiration dates and strike prices, and can be used to model the expected volatility of the underlying asset over time. < PREVIOUS NEXT >

  • Z

    < BACK KNOWLEDGE BASE Grain Glossary Get an overview of financial terms and their definitions. ALL A A B B C C D D E E F F G G H H I I K K L L M M N N O O P P Q Q R R S S T T U U V V W W X X Z Z Z Zero Coupon Bond A zero-coupon bond is a type of bond that does not pay periodic interest to the bondholder. Instead, the bond is issued at a discount to its face value, and the bondholder receives the face value of the bond at maturity. The difference between the purchase price and the face value represents the return to the bondholder, which is the equivalent of the interest that would have been paid out in periodic coupons. < PREVIOUS NEXT >

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