Financial Terms related to Exchange This document is part of the valuable contents available at www.ftpall.com, a free onlineglossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor.EXCHANGE1035 exchange • Is a transaction that permits the exchange of a life insurance contract for another insurance contract or annuity. It can be with the same or different company. It is important to research the specifics because some of the product exchanges only work one way. For example, an annuity can not be exchanged for a life policy.American stock exchange • Abbreviated AMEX. A market located in New York City that handles approximately one-fifth of all securities trades within the United States. • Abbreviated AMEX. The second-largest stock exchange in the United States. It trades mostly in small-to medium-sized companies.Bill of exchange • General term for a document demanding payment.Chicago mercantile exchange
www.ftpall.com 2|Page • Abbreviated CME. A not-for-profit corporation owned by its members. Its primary functions are to provide a location for trading futures and options, collect and disseminate market information, maintain a clearing mechanism and enforce trading rules.Commodities exchange center • Abbreviated CEC. The location of five New York futures exchanges: Commodity Exchange, Inc. (COMEX), the New York Mercantile exchange (NYMEX), the New York Cotton Exchange, the Coffee, Sugar and Cocoa exchange (CSC), and the New Find thousands of financial terms at www.ftpall.com York futures exchange (NYFE). common size statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of analyzing trends and the changing relationship between financial statement items. For example, all items in each years income statement could be presented as a percentage of net sales.Convertible exchangeable preferred stock • Convertible preferred stock that may be exchanged, at the issuers option, into convertible bonds that have the same conversion features as the convertible preferred stock.Exchange • The marketplace in which shares, options and futures on stocks, bonds, commodities and indices are traded. Principal US stock exchanges are: New York Stock Exchange (NYSE), American Stock Exchange (AMEX) and the National Association of Securities Dealers (NASDAQ) • A market where stocks are bought and sold. For example: New York Stock Exchange (NYSE), American Stock Exchange (AMEX), National Association of Securities Dealers Automated Quotations Stock Market (NASDAQ), Over the Counter (OTC).
www.ftpall.com 3|PageExchange controls • Governmental restrictions on the purchase of foreign currencies by domestic citizens or on the purchase of the local domestic currency by foreigners.Exchange for physicals • Is an ex-pit transaction whereby physical commodities or actual financial instruments are exchanged for futures contracts. This flexible technique is permitted for bona fide hedging transactions. This procedure allows for grades, quantities, locations, and delivery dates which are different than those stipulated for good Find thousands of financial terms at www.ftpall.com delivery under the standard contract rules.Exchange of assets • Acquisition of another company by purchase of its assets in exchange for cash or stock.Exchange of stock • Acquisition of another company by purchase of its stock in exchange for cash or shares.Exchange offer • An offer by the firm to give one security, such as a bond or preferred stock, in exchange for another security, such as shares of common stock.Exchange rate • The price of one countrys currency expressed in another countrys currency. • The price at which one currency trades for another.Exchange rate mechanism • Abbreviated ERM. The methodology by which members of the EMS maintain their currency exchange rates within an agreed upon range with respect to other member countries.
www.ftpall.com 4|PageExchange rate risk • Also called currency risk, the risk of an investments value changing because of currency exchange rates. • a) The danger that an unexpected change in the exchange rate between the dollar and the currency in which a projects cash flows are denominated can reduce the market value of that projects cash flow; b) The risk caused by varying exchange rates between two currencies.Exchange rate risk capital budgeting Find thousands of financial terms at www.ftpall.com • Danger that an unexpected change in the exchange rate between the dollar and the currency in which the projects cash flows are denominated can reduce the market value of that projects cash flow.Exchange risk • The variability of a firms value that results from unexpected exchange rate changes or the extent to which the present value of a firm is expected to change as a result of a given currencys appreciation or depreciation.Exchange traded fund • Abbreviated ETS. An open-ended Mutual Fund that can be continuously traded throughout the day. ETFs attempt to replicate the changes of an index of a specific financial market, so active management is unnecessary. See also: Index Fund.Exchangeable security • Security that grants the security holder the right to exchange the security for the common stock of a firm other than the issuer of the security.Expectations theory of forward exchange rates • A theory of foreign exchange rates that holds that the expected future spot foreign exchange rate t periods in the future equals the current t-period forward exchange
www.ftpall.com 5|Page rate.Fixed exchange rate • A countrys decision to tie the value of its currency to another countrys currency, gold (or another commodity), or a basket of currencies.Floating exchange rate • A countrys decision to allow its currency value to freely change. The currency is not constrained by central bank intervention and does not have to maintain its Find thousands of financial terms at www.ftpall.com relationship with another currency in a narrow band. The currency value is determined by trading in the foreign exchange market.Foreign exchange • Currency from another country. • Refers to currencies other than the United States dollar. It also refers to transactions, activities, and operations for trading, hedging, and investing in multiple currencies.Foreign exchange controls • Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.Foreign exchange dealer • A firm or individual that buys foreign exchange from one party and then sells it to another party. The dealer makes the difference between the buying and selling prices, or spread.Foreign exchange fx risk • The risk that a long or short position in a foreign currency might, due to an adverse movement in the relevant exchange rate, have to be closed out at a loss. The long or short position may arise out of a financial or commercial transaction.
www.ftpall.com 6|PageForeign exchange manager • The manager responsible for monitoring and managing the firms exposure to loss from currency fluctuations.Foreign exchange rate • The value of two currencies with respect to each other. • The price at which one currency trades for another.Foreign exchange risk Find thousands of financial terms at www.ftpall.com • This refers to the possibility of losing money due to changes in exchange rates. Net Foreign Exchange Exposure will create a FX risk even if the bank is perfectly hedged with respect to duration, credit risk, etc. • The risk that a long or short position in a foreign currency might have to be closed out at a loss due to an adverse movement in the currency rates.Foreign exchange swap • An agreement to exchange stipulated amounts of one currency for another currency at one or more future dates.Forward exchange rate • Exchange rate fixed today for exchanging currency at some future date. • The rate of exchange between two currencies at some specified future date.Gold exchange standard • A system of fixing exchange rates adopted in the Bretton Woods agreement. It involved the U.S. pegging the dollar to gold and other countries pegging their currencies to the dollar.Historical exchange rate • An accounting term that refers to the exchange rate in effect when an asset or
www.ftpall.com 7|Page liability was acquired.London international financial futures exchange • Abbreviated LIFFE. A London exchange where Eurodollar futures as well as futures-style options are traded.Membership or a seat on the exchange • A limited number of exchange positions that enable the holder to trade for the holders own accounts and charge clients for the execution of trades for their Find thousands of financial terms at www.ftpall.com accounts.New york stock exchange • Abbreviated NYSE. Also known as the Big Board or The Exhange. More than 2,00 common and preferred stocks are traded. The exchange is the older in the United States, founded in 1792, and the largest. It is located on Wall Street in New York City • The largest stock exchange in the United States. It is a corporation, operated by a board of directors, and it is responsible for setting policy, supervising Exchange and member activities, listing securities, overseeing the transfer of members seats on the Exchange, and judging whether an applicant is qualified to be a specialist.Nominal exchange rate • The actual foreign exchange quotation in contrast to the real exchange rate that has been adjusted for changes in purchasing power.Organized exchange • A securities marketplace wherein purchasers and sellers regularly gather to trade securities according to the formal rules adopted by the exchange.Organized securities exchanges • Tangible organizations that act as secondary markets in which outstanding
www.ftpall.com 8|Page securities are resold.Philadelphia stock exchange • Abbreviated PHLX. A securities exchange where American and European foreign currency options on spot exchange rates are traded.Ratio of exchange • The ratio of the amount paid per share of the target company to the per-share market price of the acquiring firm. Find thousands of financial terms at www.ftpall.comRatio of exchange in market price • The ratio of the market price per share of the acquiring firm paid to each dollar of market price per share of the target firm.Real exchange rates • Exchange rates that have been adjusted for the inflation differential between two countries.Securities and exchange commission • A federal government agency comprised of five commissioners appointed by the President and approved by the Senate. The SEC was established to protect the individual investor from fraud and malpractice in the marketplace. The Commission oversees and regulates the activities of registered investment advisers, stock and bond markets, broker/dealers, and mutual funds. • The federal regulatory body that governs the sale and listing of securities in the United States. In Canada, securities regulation is a provincial responsibility. • Abbreviated SEC. Commission created by Congress to regulate the securities markets and protect investors. It is composed of five commissioners appointed by the president of the United States and approved by the Senate. The SEC enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934,
www.ftpall.com 9|Page the Trust Indenture Act of 1939, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. The statutes administered by the SEC are designed to promote full public disclosure and protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce or through the mails must be registered with the SEC. • The SEC is a federal agency that regulates the U.S. financial markets.Securities and exchange commission sec Find thousands of financial terms at www.ftpall.com • Agency created by Congress to protect investors in securities transactions by administering securities legislation.Securities exchange act of 1934 • Is the Federal Law which covers brokers and dealers (B/Ds) and secondary market activities. This compares to the Securities Act of 1933 which focuses on new issues.Securities exchanges • The secondary marketplace that allows for the subsequent trading of financial securities created in the primary market.Simex singapore international monetary exchange • A leading futures and options exchange in Singapore.Spot exchange rate • The rate of exchange between two currencies on any given day. • Exchange rate on currency for immediate delivery. Related: forward exchange rate.Stock exchange • A formalized secondary market for financial securities that allows investors to buy and sell preferred and common shares. For example the Toronto Stock Exchange (TSX), NASDAQ, and New York Stock Exchange (NYSE).
www.ftpall.com 10 | P a g e • Formal organizations, approved and regulated by the Securities and Exchange Commission (SEC), that are made up of members that use the facilities to exchange certain common stocks. The two major national stock exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange (ASE or AMEX). Five regional stock exchanges include the Midwest, Pacific, Philadelphia, Boston, and Cincinnati. The Arizona stock exchange is an after hours electronic marketplace where anonymous participants trade stocks via personal computers.The exchange Find thousands of financial terms at www.ftpall.com • A nickname for the New York stock exchange. Also known as the Big Board. More than 2,000 common and preferred stocks are traded. The exchange is the oldest in the United States, founded in 1792, and the largest. It is located on Wall Street in New York City.