Understanding the Markets
This text is a comprehensive resource from a leading financial management consultant for global banks and institutions which looks at the financial markets that support the trading, dealing and investment processes.
TABLE OF CONTENTS Understanding the Markets
A
- AAA
- The highest credit rating for a company or asset - the risk of default is negligible.
- Accreting swap
- A swap where the notional principal increases during the life of the swap.
- Accrued interest
- Interest due on a bond or other fixed-income security that must be paid by the buyer of a security to its seller. Usual compensation: coupon rate of interest times elapsed days from prior interest payment date (i.e. coupon date) up to but not including settlement date.
- ACT/360
- A day/year count convention taking the number of calendar days in a period and a 'year' of 360 days.
- ACT/365
- Also ACT/365 Fixed or ACT/365-F. A day/year count convention taking the number of calendar days in a period and a 'year' of 365 days. Under the ISDA definitions used for interest rate swap documentation, ACT/365 means the same as ACT/ACT.
- ACT/365 Fixed
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See ACT/365.
- ACT/365-F
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See ACT/365.
- ACT/ACT
- For an interest rate swap, a day/year count convention dividing the number of calendar days in the interest period that fall in a leap year by 366 and dividing the remainder by 365.
- Actual settlement date
- Date the transaction effectively settles in the clearing house (exchange of securities eventually against cash).
- Add-on
- In capital-adequacy calculations, the extra capital required to allow for the possibility of a deal moving into profit before a mark-to-market calculation is next made.
- AEX
- Amsterdam Exchanges (now part of EURONEXT).
- Affirmation
- Affirmation refers to the counterparty's agreement with the terms of the trade as communicated.
- Agent
Copyright David Loader 2002 under license agreement with Books24x7
