Glossary of business and financial terms   v w y z
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Glossary of business and financial terms

Glossary of business and financial terms

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Glossary of business and financial terms   v w y z Glossary of business and financial terms v w y z Presentation Transcript

  • Glossary of Business and FinancialTerms
    Gustavo Vega
    Feb 2011
  • V
    Glossary of Business and FinancialTerms
    Value added tax: Method of indirect taxation whereby a tax is levied at each stage of production on the value added at that specific stage.
    Value dating: A procedure used by non-U.S. banks to delay, often for days or even weeks, the availability of funds deposited with them.
    Vanilla issue: A security issue that has no unusual features.
    Variable cost: A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero.
    Variable rate cds: Short-term certificate of deposits that pay interest periodically on roll dates. On each roll date, the coupon on the CD is adjusted to reflect current market rates.
    Thousands of business and financial terms available at http://www.ftpall.com
  • V
    Glossary of Business and FinancialTerms
    Variance rule: Specifies the permitted minimum or maximum quantity of securities that can be delivered to satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Feddie Mac pass-through securities, the accepted variance is plus or minus 2.499999 percent per million of the par value of the TBA quantity.
    Vega risk: Refers to the monetary exposure for a change in volatility for an option. It might refer to a change from 6 to 7 or 6 to 5 percent depending on whether a party is short or long the option. Some participants breakdown the vega risks into finer gradients or decimals.
    Vertical analysis: The process of dividing each expense item in the income statement of a given year by net sales to identify expense items that rise faster or slower than a change in sales.
    Thousands of business and financial terms available at http://www.ftpall.com
  • V
    Glossary of Business and FinancialTerms
    Volatility: Volatility is an indicator of expected risk. It demonstrates the degree to which the market price of an asset, rate, or index fluctuates from average. Volatility is calculated by finding the standard deviation from the mean, or average, return.
    Voluntary settlement: An arrangement between a technically insolvent or bankrupt firm and its creditors enabling it to bypass many of the costs involved in legal bankruptcy proceedings.
    Thousands of business and financial terms available at http://www.ftpall.com
  • W
    Glossary of Business and FinancialTerms
    W type bottom: A double bottom where the price or indicator chart has the appearance of a W. See: technical analysis.
    Wal: See Weighted Average Life.
    Wanted for cash: A statement displayed on market tickers indicating that a bidder will pay cash for same day settlement of a block of a specified security.
    Warrant premium: The difference between the actual market value and theoretical value of a warrant.
    Watch list: A list of securities selected for special surveillance by a brokerage, exchange or regulatory organization; firms on the list are often takeover targets, companies planning to issue new securities or stocks showing unusual activity.
    Weighted average: An average in which each number to be averaged is assigned a weight that determines the relative importance of each figure on the overall average. Weighted averages are often used to assign greater weight to more recent data, on the assumption that older data may be less applicable to current conditions.
    Thousands of business and financial terms available at http://www.ftpall.com
  • W
    Glossary of Business and FinancialTerms
    Weighted average maturity: The WAM of a MBS is the weighted average of the remaining terms to maturity of the mortgages underlying the collateral pool at the date of issue, using as the weighting factor the balance of each of the mortgages as of the issue date.
    Well diversified portfolio: A portfolio spread out over many securities in such a way that the weight in any security is small. The risk of a well-diversified portfolio closely approximates the systemic risk of the overall market, the unsystematic risk of each security having been diversified out of the portfolio.
    Wholesale mortgage banking: The purchasing of loans originated by others, with the servicing rights released to the buyer.
    Wild card option: The right of the seller of a Treasury Bond futures contract to give notice of intent to deliver at or before 8:00 p.m. Chicago time after the closing of the exchange (3:15 p.m. Chicago time) when the futures settlement price has been fixed. Related: Timing option.
    Thousands of business and financial terms available at http://www.ftpall.com
  • W
    Glossary of Business and FinancialTerms
    Wire transfer: An electronic communication that, via bookkeeping entries, remove funds from the payer's bank and deposit them in the payee's bank, thereby reducing collection float.
    Withholding tax: A tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country. Tax levied on dividends paid abroad.
    Work out: Is the process to cover a short or liquidate a long position. This activity can be the result of an error transaction, unsold inventory, or closing out a large position.
    Workout period: Realignment period of a temporary misaligned yield relationship that sometimes occurs in fixed income markets.
    Write down: Decreasing the book value of an asset if its book value is overstated compared to current market values.
    Thousands of business and financial terms available at http://www.ftpall.com
  • Y
    Glossary of Business and FinancialTerms
    Y2k: Refers to the Year 2000. It is often associated with a computer software problem frequently referred to as the Y2K bug. This is the inability of software to recognize dates greater than December 31, 1999.
    Year end: The end of the business's financial year. This will be December 31 for most businesses. If your year end is not December, you are considered to have a fiscal year.
    Yield curve option pricing models: Models that can incorporate different volatility assumptions along the yield curve, such as the Black-Derman-Toy model. Also called arbitrage-free option-pricing models.
    Thousands of business and financial terms available at http://www.ftpall.com
  • Y
    Glossary of Business and FinancialTerms
    Yield to call, option or event date: Is akin to Yield to Maturity but adjusts for a short life expectancy. It is the rate of return which is measured by the current expected income stream relative to the prevailing market price assuming that the asset is held until the exercise of the first option or termination event. If the instrument is trading at a discount, then the yield to call, option or event date, will be greater than the coupon rate. If the instrument is trading at a premium, then the yield to call, option or event date, will be less than the coupon rate.
    Ytm: See Yield to Maturity.
    Thousands of business and financial terms available at http://www.ftpall.com
  • Z
    Glossary of Business and FinancialTerms
    Z score: Statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. Separately, z score is the output from a credit-strength test that gauges the likelihood of bankruptcy.
    Zero cost collar: Is a transaction which has little or zero cash outlay or cost for the initiating person. Often, a security is held and some protection is sought via a hedging transaction. One example, would be the purchase of an out-of-the-money put (debit) and the sale of an out-of-the-money call (credit). Here, the premiums for the debit and credit are nearly the same. Therefore, there would be little or no cost for the person seeking the hedge. However, this position places a cap on the potential reward for holding the underlying asset. Essentially, the protection does not kick-in until the price of the underlying instrument goes below the exercise price for the put. Generally speaking, it should be noted that if the hedge occurred with both options at-the-money, then the person replicated a synthetic short against an actual long position. For the latter, the hedge would be considered as
    Thousands of business and financial terms available at http://www.ftpall.com
  • Z
    Glossary of Business and FinancialTerms
    delta neutral whereas using two out-of-the-money options, the hedge at the origination would not be delta neutral. Rather, it would be computed as a partial hedge when placed.
    Zero minus tick: Refers to a trading transaction made at the same price as the preceding one but the preceding one was lower than its predecessor.
    Zero uptick: Related: tick-test rules.
    Thousands of business and financial terms available at http://www.ftpall.com