sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
FORWARD FORWARD RATE	The FORWARD RATE used as a reference in a FORWARD RATE AGREEMENT or an INTEREST RATE FORWARD CONTRACT; it can be considered the interest rate for a certain period of time applicable to a certain future starting point.	palgrave	32.91	18.1	0	10.46	19.9	9.26	25	20.46
FORWARD MARGIN	See FORWARD POINTS.	palgrave	93.81	0.9	0	5.35	6.8	9.05	0.5	1.2
FORWARD MARKET	The general marketplace for ASSETS or financial CONTRACTS that are settled and delivered at a future time. See also FORWARD, SPOT MARKET.	palgrave	51.85	8.8	0	11.35	8.9	9.21	6.5	9.85
FORWARD POINTS	The differential between a SPOT RATE and FORWARD RATE in the FOREIGN EXCHANGE markets. Forward points arise as a result of INTEREST RATE DIFFERENTIALS, market expectations related to CURRENCIES and INTEREST RATES, and/or currency SUPPLY and DEMAND. While forward points can be computed as the difference between spot and forward currency rates, they can also be estimated via:where FXs is the spot currency rate, rdiff is the interest rate differential between the two currencies, t is the time to maturity (days), and RB is the rate basis (e.g., 360 or 365 days). Also known as FORWARD MARGIN.	palgrave	46.81	12.8	14.9	11.67	14.9	9.56	16.375	13.84
FORWARD PREMIUM	A FORWARD PRICE (or rate) for future delivery of an ASSET that is higher than the SPOT PRICE (or rate) for immediate delivery. See also FORWARD DISCOUNT.	palgrave	66.23	7.4	0	8.11	7.5	7.81	7.25	8.36
FORWARD PRICE	The price quoted for future delivery of an ASSET under a FORWARD or FUTURE, comprised of the SPOT PRICE and a positive or nega- tive COST OF CARRY; a quoted price may reflect a FORWARD PREMIUM or FORWARD DISCOUNT. The equilibrium, no-ARBITRAGE forward prices for various assets are given as follows:COMMON STOCK, no DIVIDENDS:F = S ertwhere S is the stock price, e is the exponential constant, r is a prevailing DISCOUNT RATE, and t is the time to MATURITY.Stock, continuous dividends:where δ is the DIVIDEND YIELD and all other terms are as defined above.Currency:F= Sp e (r1 – r2)twhere Sp is the spot price, r1 is the discount rate for currency 1, r2 is the dis- count rate for currency 2, and all other terms are as defined above.Commodity with LEASE market:where Μ is the lease payment rate and all other terms are as defined above.Commodity with carry market:where λ is the cost of storage and INSURANCE, and all other terms are as defined above.Commodity with carry market and CONVENIENCE YIELD:where cy is the convenience yield, and all other terms are as defined above. See also FORWARD RATE.	palgrave	16.29	26.6	18.9	10.69	32.8	11.2	32.5	28.48
FORWARD PRICE/EARNINGS RATIO	A PRICE/EARNINGS RATIO that is computed based on earnings forecasts of a company’s results rather than its historical results. The earnings estimates may be based on consensus forecasts from EQUITY ANALYSTS. See also TRAILING PRICE/EARNINGS RATIO.	palgrave	42.38	10.3	11.9	15.18	12.3	9.93	7.333333	12.58
FORWARD RATE	(1) The rate quoted for future delivery of an ASSET, used in the calculation of FORWARDS and FUTURES. A quoted forward rate mayreflect a FORWARD PREMIUM or FORWARD DISCOUNT. (2) See IMPLIED FORWARD RATE. (1) See also FORWARD PRICE.⎛ (r − r ) ∗ N ∗ (n / d )⎞⎝where rref is the reference fixing rate, rFRA is the FRA contract rate, N is the notional value of the contracts, n is the number of days in the contract period, d is the day count basis (360 or 365) Also known as INTEREST RATE FORWARD. See also FORWARD FORWARD RATE	palgrave	55.2	13.7	11.9	7.09	15.3	10.09	19	15.94
FORWARD RATE MODEL	A form of mathematical model used in the pricing of INTEREST RATE DERIVATIVES which uses and evolves randomly the entire FORWARD curve of the short rate. See also SHORT RATE MODEL.	palgrave	55.74	9.3	0	10.09	9.1	8.99	8.75	11.36
FORWARD START OPTION	An OVER-THE-COUNTER COMPLEX OPTION that is contracted on TRADE date t to commence on forward date t + 1, with the forward start date, STRIKE PRICE, and final MATURITY parameters established on trade date. Once the forward date is reached a conventional EUROPEAN OPTION comes into existence.	palgrave	48.13	12.3	0	12.77	15	10.27	15.75	15.29
FORWARD SWAP	An OVER-THE-COUNTER SWAP that is contracted on TRADE date t and commences on forward date t + 1, with the INTEREST RATE and final MATURITY parameters established on trade date. Once the forward date is reached a conventional fixed/floating INTEREST RATE SWAP comes into existence.	palgrave	40.69	13.1	0	12.88	14.8	10.47	16.25	15.16
FOUNDATION METHODOLOGY	A credit-based CAPITAL ALLOCATION process promulgated by the BANK FOR INTERNATIONAL SETTLEMENTS (BIS) under the INTERNAL RATINGS-BASED (IRB) APPROACH. BANKS use internal models to determine a COUNTERPARTY’S DEFAULT RISK, but use BIS- supplied RISK factors to estimate RISK EQUIVALENT EXPOSURE and LOSS- GIVEN DEFAULT in order to obtain estimates of EXPECTED CREDIT LOSS and UNEXPECTED CREDIT LOSS. CAPITAL is then allocated to cover the resulting exposure. See also ADVANCED METHODOLOGY.	palgrave	19.87	14.8	16.5	16.01	15.4	11.5	14.25	16.14
FRA	See FORWARD RATE AGREEMENT.	palgrave	75.88	3.7	0	10.15	8.8	7.78	1	1.6
FRACTIONAL BANKING	See FRACTIONAL RESERVE BANKING.	palgrave	33.58	9.6	0	15.95	13.5	15.68	2	11.6
FRANKFURT STOCK EXCHANGE	The primary STOCK EXCHANGE of Germany, founded in 1820 and now owned by DEUTSCHE BORSE, accounting for the majority of EQUITY TRADING in the country. The exchange sets prices on an AUCTION basis through BROKERS and, through separate divisions, deals in LARGE CAP, MID-CAP, and SMALL CAP STOCKS and GOVERNMENT BONDS.	palgrave	54.05	12.1	0	12.13	15.8	11.4	16.25	14.12
FRAUD	An act of intentional deception or dishonesty perpetrated by one or more individuals, generally for financial gain. See also EMBEZZLEMENT, ULENT MISREPRESENTATION.	palgrave	1.09	15.8	0	17.9	14.4	11.36	9	20.76
FRAUDULENT CONVEYANCE	The act of transferring ASSETS from one party (often an insolvent DEBTOR) to another party, with the express intent of keeping such assets away from CREDITORS or a BANKRUPTCY TRUSTEE or RECEIVER. Also known as FRAUDULENT TRANSFER. See also UNFAIR PREFERENCE.	palgrave	49.11	9.8	12.5	12.11	10.5	9.71	8.5	12.31
FRAUDULENT MISREPRESENTATION	A false CLAIM made by one party in order to gain economic advantage from a second party. Proof of misrepresenta- tion can result in termination of CONTRACTS. See also FRAUD.	palgrave	61.33	7.2	9.7	8.33	6.2	9.4	5.333333	9.33
FREDDIE MAC	See FEDERAL HOME LOAN MORTGAGE CORPORATION.	palgrave	31.55	10.4	0	14.95	11.4	11.83	4	15.73
FREE CAPITAL	In the United Kingdom, FREE FLOAT.	palgrave	90.77	2.1	0	5.27	4.3	0.3	2	2.4
FREE CASH FLOW	A CASH FLOW measure that is computed as OPERATING CASH FLOW less capital expenditures, or as NET INCOME plus DEPRECIATION, less changes in WORKING CAPITAL, less changes in capital expenditures.The resulting figure is generally considered to be an accurate reflection of a company’s true cash position. See also FINANCING CASH FLOW, FREE CASH FLOW TO EQUITY, FREE CASH FLOW TO FIRM, INVESTING CASH FLOW.	palgrave	22.08	18.1	0	13.24	19.5	9.66	25	21.55
FREE CASH FLOW TO EQUITY (FCFE)	Cash available to SHAREHOLDERS after all EXPENSES, INVESTMENTS, and INTEREST payments (after TAX) to DEBT holders have been made. It can be computed as OPERATING CASH FLOW less capital expenditures less debt payments. See also DISCOUNTED CASH FLOW VALUATION MODEL, FREE CASH FLOW TO FIRM.	palgrave	47.79	10.3	13.6	12.52	11.6	9.64	10.833333	14
FREE CASH FLOW TO FIRM (FCFF)	Cash available to BOND holders and SHAREHOLDERS after all EXPENSES and INVESTMENTS have been made. It can be computed as EARNINGS BEFORE INTEREST AND TAX times (1 – tax rate) plus DEPRECIATION less capital expenditures less changes in WORKING CAPITAL less changes in other ASSETS. See also DISCOUNTED CASH FLOW VALUATION MODEL, FREE CASH FLOW TO EQUITY.	palgrave	43.73	11.9	14.6	12.36	12.6	10.4	13.5	14.62
FREE FLOAT	SHARES of a company that are held by the public at large rather than by controlling or major SHAREHOLDERS. See also FREE CAPITAL.	palgrave	68.26	6.6	0	8.04	6.2	6.27	6.75	8.08
FREE MARKET ECONOMY	An economic system where the means of pro- duction and distribution are primarily owned by the private sector, and where government involvement is very limited. The economy encourages competi- tion and resource allocation and pricing is driven primarily by market forces of SUPPLY and DEMAND. Also known as MARKET ECONOMY.	palgrave	37.6	12.2	14.1	13.4	12.6	11.1	12	13.08
FREE ON BOARD (FOB)	The declared value of EXPORT goods, including the cost of production and transportation to the port of shipment. FOB does not include the cost of transportation from the port to the destination or the cost of INSURANCE, both of which are the responsibility of the importer. See alsoCOST, INSURANCE, FREIGHT (CIF).	palgrave	62.68	8.7	13	11.31	11.4	9.12	11.5	12.29
FREE RESERVES	Any cash RESERVES held by a regulated FINANCIAL INSTI- TUTION, such as a BANK, BUILDING SOCIETY, or SAVINGS AND LOAN, that exceed those required by the relevant REGULATOR.	palgrave	34.6	15.4	0	11.61	16.8	10.66	19	18.34
FREE RIDER	An UNDERWRITER or SYNDICATE member that retains a portion of a PRIMARY MARKET offering in order to sell at what it hopes will be a higher SECONDARY MARKET price; the practice is illegal in many markets.	palgrave	34.94	17.3	0	9.88	18.4	10.69	23	19.96
FREE TRADE	A process of exchanging goods, services, and resources without undue constraints, such as TARIFFS, surcharges, or QUOTAS.	palgrave	54.22	9.9	0	16.18	16.2	12.84	8.5	9.15
FREEZE-OUT	The process of persuading MINORITY INTERESTS of a TARGET company to sell their SHARES after a TENDER OFFER has been made. The intent behind the freeze-out is for the acquiring company to accumulate all shares so that the transfer is complete. See also DRAG ALONG RIGHTS, TAG ALONG RIGHTS.	palgrave	63.39	8.5	11.9	10.26	9.8	8.63	10.5	10.6
FRESH START ACCOUNTING	A revaluation of ASSETS and LIABILITIES that takes place when REORGANIZATION of a bankrupt company results ina general restatement of liabilities. The accounting is applied in the United States to any company operating under CHAPTER 11 that expects to complete a reorganization, as well as any company that is emerging from Chapter 11.	palgrave	19.2	17.2	0	13.64	17	10.02	19.25	15.13
FRICTION COST	See TRANSACTION COST.	palgrave	59.97	5.6	0	9.23	9.9	9.05	1.5	14.53
FRIENDLY SOCIETY	In the United Kingdom, a MUTUAL ORGANIZATION for savings and life INSURANCE that is owned and operated by its members; the organizational structure of the friendly society conveys certain TAX advan- tages to the mutual owners.	palgrave	18.02	19.7	0	13.41	21.6	11.12	25	21.07
FRIENDLY TAKEOVER	An ACQUISITION that is agreed on amicable terms between the acquiring company and the TARGET. A friendly takeover may arise as a result of negotiations between the two companies, or it may be a WHITE KNIGHT response to a HOSTILE TAKEOVER offer from another party.	palgrave	48.64	12.1	0	10.86	12.8	9.31	14.75	13.44
FRN	See FLOATING RATE NOTE.	palgrave	92.8	1.3	0	4.35	4.1	7.78	1	1.6
FRONT BOOK	A trading BOOK managed by a DEALER in which cus- tomer ORDERS are handled. The front book is intended to feature regular turn- over as the dealer places BIDS and OFFERS against customer orders. See alsoBACK BOOK.	palgrave	75.91	5.7	7.8	8.63	7.2	10.22	5.833333	7.08
FRONT DOOR	A process where the BANK OF ENGLAND attempts to influence UK MONEY SUPPLY by LENDING directly to DISCOUNT HOUSES and other financial institutions. See also BACK DOOR.	palgrave	49.31	9.7	0	11.77	9.8	11.32	7.75	11.33
FRONT LOAD	A mechanism in which COMMISSIONS on a MUTUAL FUND or INVESTMENT TRUST are charged to INVESTORS at the time of purchase. See also BACK LOAD.	palgrave	75.71	5.8	0	8.05	6.5	9.31	7.25	11.4
FRONT MONTH	See NEARBY CONTRACT.	palgrave	59.97	5.6	0	7.32	8.3	9.05	0.5	1.2
FRONT OFFICE	The units and functions within a BANK or FINAN- CIAL INSTITUTION that are responsible for generating REVENUES through LENDING, TRADING, CORPORATE FINANCE, ASSET MANAGEMENT, and so forth. See also BACK OFFICE.	palgrave	47.28	10.5	0	14.44	13.4	12.05	10.25	12.65
FRONT RUNNING	An illegal practice where a DEALER, MARKET MAKER, or SPECIALIST executes a transaction in advance of a customer trade in order to capture favorable price movements.	palgrave	36.63	14.6	0	13.35	16.8	11.61	18	18.09
FRONTING COMPANY	See FRONTING INSURER.	palgrave	59.97	5.6	0	9.23	9.9	14.31	1.5	14.53
FRONTING INSURER	An INSURER that is interposed between a CEDING INSURER or CAPTIVE, and a REINSURER. Use of a fronting insurer allows the insurer or captive to access the professional reinsurance market directly and obtain coverage at more favorable PREMIUM rates. Also known as FRONTING COMPANY.	palgrave	39.63	11.4	15	12.69	11.2	10.11	11.666667	14.06
FROTHY	A market condition reflecting excessive speculative buying or OVERBOUGHT conditions. Also known as TOPPY.	palgrave	22.07	11.9	0	17.35	13	13.01	5	17.09
FSA	see FINANCIAL SERVICES AUTHORITY.	palgrave	-8.73	15.5	0	18.85	15.9	15.68	3	21.6
FTC	See FEDERAL TRADE COMMISSION.	palgrave	33.58	9.6	0	13.05	11.2	11.73	3	21.6
FULL RECOURSE LOAN	A LOAN with repayment that may come from the proceeds of the project/ASSET being financed or the sale of specific COLLATERAL, or from the resources of the borrower if project/collateral CASH FLOWS prove insufficient. See also RECOURSE, NONRECOURSE, NONRECOURSE LOAN, PARTIAL RECOURSE LOAN.	palgrave	41.19	12.9	0	14.97	16.4	9.84	15.25	14.18
FULLY DILUTED BASIS	A method of computing a company’s EARNINGS PER SHARE by taking account of any potential new SHARES of COMMON STOCK that may be created through a planned NEW ISSUE of EQUITY, exercise of outstanding stock OPTIONS, or conversion of any existing CONVERTIBLE BONDS. See also DILUTION.	palgrave	48.13	12.3	0	12.13	14.1	11.64	17	18.77
FULLY PAID SHARES	The SHARES of a company that have been paid up to the full PAR VALUE at the time of initial issuance, and on which INVESTORS are not subject to a further call for CAPITAL. See also PARTLY PAID SHARES.	palgrave	77.06	7.4	0	6.38	7.9	6.63	10.75	7.8
FUND	A vehicle that is established to gather and invest CAPITAL provided by INVESTORS. A fund can take various structural forms, such as a PENSION , MUTUAL , HEDGE , CLOSED-END , OPEN-END , or UNIT INVESTMENT TRUST, and can be established to invest in spe- cific ASSET classes.	palgrave	41.19	12.9	0	11.43	14	11.68	16	14.18
FUND FAMILY	A group of diverse FUNDS offered by a single fund manage- ment company. INVESTORS allocating CAPITAL within a fund family can gen- erally switch between available funds without incurring incremental charges. The largest fund families are able to offer investors a broad range of investment choices, which can include global STOCK and BOND funds, sector funds, and emerging market funds.	palgrave	51.18	11.1	13	13.58	14.2	11.21	13	12
FUND MANAGER	See PORTFOLIO MANAGER.	palgrave	9.21	12.7	0	11.15	11.5	9.05	2.5	14.53
FUND OF FUNDS (FOF)	A FUND that invests in other MUTUAL FUNDS or HEDGE FUNDS. In exchange for vetting individual funds and constructing, and tactically adjusting, PORTFOLIOS to achieve specific RETURNS, fund of fund managers charge their clients an annual fee and a performance fee. See also 1 AND 10.	palgrave	55.95	9.3	13	11.13	10.4	11.6	10.666667	13.95
FUNDAMENTAL ANALYSIS	An INVESTMENT ANALYSIS approach that focuses on a company’s financial and ACCOUNTING value and its abil- ity to generate core operating EARNINGS in order to increase the STOCKprice. Fundamental analysts advocate the purchase of stocks selling below LIQUIDATION VALUE, which may be evidenced by a low PRICE/EARNINGS RATIO and CURRENT ASSETS that exceed CURRENT LIABILITIES and long- term DEBT. See also TECHNICAL ANALYSIS.Additional reference: Graham and Dodd (1962).	palgrave	23.05	15.7	16.7	16.13	17.6	12.89	17	19.08
FUNDAMENTAL FACTOR MODEL	A MULTIFACTOR RISK MODEL with inputs that include historical STOCK RETURNS and observable industry factors, such as PRICE/EARNINGS ratios, price/BOOK VALUE, economic growth, and so forth. The sensitivity of a stock price to each fundamental factor can be estimated through such a model, allowing the projection of EXPECTED RETURNS. See also MACROECONOMIC FACTOR MODEL, STATISTICAL FACTOR MODEL.	palgrave	26.81	14.2	15	16.01	16	10.95	13.833333	16.72
FUNDED DEBT	(1) Any DEBT obligation issued by a sovereign authority that need not be repaid, i.e., an instrument that exists in PERPETUITY, such as a CONSOL. (2) Any debt obligation of a company or sovereign authority that matures in more than one year.	palgrave	28.85	19.7	0	9.71	22	10.98	30	21.56
FUNDED PENSION PLAN	A PENSION PLAN where all future LIABILITIES are fully covered by existing fund resources. See also UN.	palgrave	54.39	7.8	0	9.3	6.7	11.49	4.25	8.11
FUNDING	The general process of raising DEBT to finance operations.	palgrave	45.42	9.2	0	12.5	9.3	12.86	5.5	8.04
FUNDING LIQUIDITY RISK	The RISK of loss arising from an inability to roll over existing unsecured funding or obtain new unsecured funding without incurring a large cost. A subcategory of LIQUIDITY RISK. See alsoASSET LIQUIDITY RISK, ASSET-FUNDING LIQUIDITY RISK, ENDOGENOUS LIQUIDITY, EXOGENOUS LIQUIDITY.	palgrave	15.68	14.4	15.9	16.05	13.9	9.82	11.666667	14.32
FUNGIBILITY	The ability to exchange or substitute one ASSET with another. Fungibility is important in COLLATERAL management for OVER-THE- COUNTER DERIVATIVES and REPURCHASE AGREEMENTS, and in delivery decisions for EXCHANGE-TRADED DERIVATIVES.	palgrave	5.49	16.2	0	20	17.8	10.7	14	18
FUNGIBLE ISSUE	A SECURITY that can be exchanged for an identical or similar security of the same ISSUER.	palgrave	38.32	11.9	0	8.87	8.4	9.36	12	13.9
FURTHEST MONTH	An EXCHANGE-TRADED DERIVATIVE CONTRACT with the longest MATURITY date featuring trading volume; contracts with even longer maturity dates that are inactive or dormant are not considered to be the furthest month contract. See also NEARBY CONTRACT, NEXT NEARBY CONTRACT.	palgrave	34.76	13.3	0	16.19	16.1	10.68	13.25	12.93
FUTURE VALUE	A financial computation where the value of a current CASH FLOW or lump sum is projected into the future through use of an appropriate RETURN or YIELD. The general form of the equation is given as:where CF0 is the current cash flow, t is the time to MATURITY, and r is the DISCOUNT RATE or yield.The future value of a cash flow that is subject to CONTINUOUS COMPOUNDING is given as:where e is the exponential constant, N is the number of years over which the compounding occurs.The base computation for multiple cash flows occurring over time expands to:FV = ∑ CFt (1 + r )n −twhere n is the last period of the cash flows.The future value of a stream of cash flows, such as those characterizing an ANNUITY, can be computed through an extension of the same equation:(1⎣where CFP is the periodic future cash flow and other terms are as defined above. See also DISCOUNTED CASH FLOW, NET PRESENT VALUE, PRESENT VALUE.	palgrave	25.43	23.1	18.2	9.82	27.4	10.22	32	25.7
FUTURES CALL	An EXCHANGE-TRADE OPTION CONTRACT granting the buyer the right, but not the obligation, to buy a FUTURES contract at a pre- specified STRIKE PRICE. See also FUTURES PUT.with CLEARING MEMBERS on behalf of clients. FCMs are the only entities, apart from CLEARINGHOUSES, that can hold customer funds. In the United States, FCMs must meet certain minimum financial requirements and must be members of the National Futures Association, a SELF-REGULATORY ORGANIZATION; they may be structured as independent organizations or divisions of larger financial institutions.	palgrave	33.44	13.8	14.9	15.14	16.1	10.38	14.625	15.55
FUTURES OPTION	An EXCHANGE-TRADE OPTION CONTRACT granting the buyer the right, but not the obligation, to buy or sell a FUTURES contract at a prespecified STRIKE PRICE. See also FUTURES CALL, FUTURES PUT.	palgrave	64.2	8.2	0	11.08	10.5	8.48	8.25	8.78
FUTURES PUT	An EXCHANGE-TRADED OPTION CONTRACT granting the buyer the right, but not the obligation, to sell a FUTURES contract at a pre- specified STRIKE PRICE. See also FUTURES CALL.	palgrave	65.73	7.6	0	10.9	10	9.97	7.5	8.46
FX	See FOREIGN EXCHANGE.	palgrave	59.97	5.6	0	9.23	9.9	9.05	0.5	1.2
G3	See GROUP OF 3.	palgrave	118.18	-2.3	0	-7.26	-5.4	7.78	1	1.6
G7	See GROUP OF 7.	palgrave	118.18	-2.3	0	-7.26	-5.4	7.78	1	1.6
G8	See GROUP OF 8.	palgrave	118.18	-2.3	0	-7.26	-5.4	7.78	1	1.6
G10	See GROUP OF 10.	palgrave	118.18	-2.3	0	-5.81	-4.2	7.78	1	1.6
GAAP	See GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.	palgrave	-35.13	19.4	0	24.68	19.7	16.52	5.5	34
GAMING	The act of taking advantage of information gained through PINGING to position an ORDER to capitalize on of a known large BID or OFFER residing in a DARK POOL. While not illegal, dark pool operators attempt to guard their pools from pinging and gaming, often by establishing minimum order size and tracking TRADING patterns of participants.	palgrave	34.6	15.4	0	12.02	16.4	10.1	19	18.34
GAMING CONTRACT	An agreement to enter into a game of chance for money. In certain jurisdictions DERIVATIVES may be defined as gaming con- tracts. Also known as WAGERING CONTRACT.	palgrave	62.34	6.8	8.8	9.31	6.8	9.35	4.5	8.04
GAMMA	The change in the value of an OPTION’s DELTA for a change in the value of the UNDERLYING market reference, all other variables held constant. Gamma, as a measure of the CONVEXITY of option prices, is often used to gauge sensitivity to large and sudden market moves. The gammas of the CALL OPTION and PUT OPTION under the BLACK-SCHOLES MODEL are identical and given by:11whereand S is the stock price, t is the time to MATURITY, σ is the STANDARD DEVIATION, and where the value of N′(d1) can be obtained from a standard table of PROBABILITY functions.The gammas of long and short puts and calls are shown as:See also GAMMA HEDGE, NEGATIVE GAMMA, GREEKS, RHO, THETA, VEGA.	palgrave	40.35	17.3	13.6	9.76	20.4	10.7	19.666667	18.68
GAMMA HEDGE	A HEDGE technique used to establish a GAMMA NEUTRAL position, and used primarily to manage the effects of NEGATIVE GAMMA, which can create large losses if markets move sharply and quickly before DELTA HEDGES can be rebalanced. Creating a hedge for a negative gamma position generally requires the purchase or use of a position with POSITIVE GAMMA (e.g., an instrument with positive CONVEXITY, such as a LONG POSITION in a CALL OPTION or PUT OPTION).	palgrave	24.95	19.1	0	11.56	20.9	11.18	26.25	20.33
GAMMA NEUTRAL	A PORTFOLIO of OPTIONS that is neutral with respect toits GAMMA, meaning that it is HEDGED for large moves in the UNDERLYING. G See also DELTA NEUTRAL, GAMMA HEDGE, VEGA NEUTRAL, THETA NEUTRAL.	palgrave	63.19	8.5	0	9.68	9.8	11.63	8.25	9.02
GAO	See GOVERNMENT ACCOUNTABILITY OFFICE.	palgrave	-34.11	19	0	24.65	20.6	7.78	3	11.6
GAPPING	The process of deliberately mismatching ASSETS and LIABILITIES in order to take advantage of an anticipated change in INTEREST RATES. Although gapping has the potential of generating greater RETURNS, it can also increase a firm’s potential losses via DIRECTIONAL RISK, CURVE RISK, and/ or LIQUIDITY RISK. See also ASSET-LIABILITY MANAGEMENT, GAP, RATE-SENSITIVE ASSETS, RATE-SENSITIVE LIABILITIES.	palgrave	10.6	16.3	16.3	17.52	17.1	12.3	14.5	16.77
GARMAN-KOHLHAGEN MODEL	A closed-form OPTION pricing model developed by Garman and Kohlhagen that is used to value EUROPEANOPTIONS on CURRENCIES. The model is an adaptation of the BLACK-SCHOLES MODEL. The equations are given as:andwhere S is the current EXCHANGE RATE (domestic currency per unit of for- eign currency), X is the STRIKE PRICE, t is the time to MATURITY, r is the CONTINUOUSLY COMPOUNDED domestic INTEREST RATE, q is the con- tinuously compounded foreign interest rate,2	palgrave	37.94	14.1	15.9	12.31	15.6	11.9	17.333333	15.83
GATE	A restriction imposed by a HEDGE FUND that limits the amount of REDEMPTIONS that can occur in a given period. A fund may be gated when the manager is attempting to preserve CAPITAL and avoid an acceleration of redemptions that would otherwise lead to forced disposal of ASSETS.	palgrave	47.12	12.7	0	10.57	13.1	10.09	17	14.6
GATHER IN THE STOPS	Concentrated selling to drive a SECURITY price down to levels where STOP ORDERS are known to exist. This forces the stop orders to convert into buy or sell MARKET ORDERS, clearing the way for further upward or downward moves once executed. See alsoSNOWBALLING.	palgrave	49.65	11.7	0	11.6	13.2	9.48	12.75	12.32
GAUSSIAN DISTRIBUTION	See NORMAL DISTRIBUTION.	palgrave	9.21	12.7	0	15.03	14.6	14.31	1.5	14.53
GC	See GENERAL COLLATERAL.	palgrave	-24.64	17.4	0	13.12	13	9.05	2.5	14.53
GDP DEFLATOR	A measure designed to express current GROSS DOMESTIC PRODUCT (GDP) in terms of GDP in a base year, effectively providing a gauge of INFLATION. It is computed as:where GDPnom is the current period GDP, GDPreal is the base year GDP. Also known as IMPLICIT PRICE DEFLATOR.	palgrave	55.95	9.3	12.5	9.39	9.2	10.57	10.333333	13.08
GDR	See GLOBAL DEPOSITORY RECEIPT.	palgrave	-8.73	15.5	0	14.5	12.4	15.68	2	11.6
GDS	See GLOBAL DEPOSITORY SHARE.	palgrave	8.2	13.1	0	11.6	10	11.73	2	11.6
GEARING	See LEVERAGE.	palgrave	77.91	2.9	0	1.3	7.8	11.63	0	0.8
GEISHA	A PRIVATE PLACEMENT, denominated in a CURRENCY other than Japanese yen, which is issued by a Japanese company. See alsoDAIMYO, SAMURAI, SHIBOSAI, SHOGUN.	palgrave	34.42	11.3	0	12.8	11.2	11.76	8.25	13.3
GEMM	See GILT-EDGED MARKET MAKER.	palgrave	50.5	7.2	0	10.15	10	15.68	1	1.6
GENERAL AGREEMENTS TO BORROW	Agreements between GROUP OF 10 countries plus Switzerland to provide the INTERNATIONAL MONETARY FUND with LOANS on an emergency basis, which the IMF can then lend on to member countries in need of funds.	palgrave	45.43	15.4	0	11.96	19.1	11.82	20	17.13
GENERAL COLLATERAL (GC)	COLLATERAL in the REPURCHASE AGREEMENT market that is in abundant SUPPLY and which does not there- fore allow a repurchase agreement BORROWER to obtain a lower than normal BORROWING rate. See also SPECIAL.	palgrave	46.27	10.9	0	12.29	11.5	10.2	10.75	11.45
GENERAL EQUILIBRIUM	A MICROECONOMIC framework that focuses on SUPPLY, DEMAND, and prices of individual markets, and how these interact simultaneously at a macroeconomic level. Multiple strands of study support this theory, including theories based on partial equilibrium, competitive equi- librium, and price transfer equilibrium.	palgrave	7.86	17.4	0	18.62	19.2	13.7	17.5	20.78
GENERAL INSURANCE	In the United Kingdom, INSURANCE coverage for damage or loss to property. The UK market is broadly segmented into the three areas: large commercial RISK coverage (for large companies and unique risks, such as those UNDERWRITTEN through LLOYD’S OF LONDON), commerciallines (including small business properties), and personal lines (including home and automobile coverage for individuals). See also NONLIFE INSURANCE, PROPERTY AND CASUALTY INSURANCE.	palgrave	24.78	15	17.9	16.88	17.9	10.44	17.166667	16.65
GENERAL OBLIGATION (GO) BOND	In the United States, a MUNICIPAL BOND issued by a state or local authority that is typically used to finance nonrevenue-producing projects, such as schools and transportation systems. Bonds are generally repaid through the issuance of new DEBT or via TAX REV- ENUES. See also REVENUE BOND.	palgrave	55.54	9.4	11.2	11.66	10.8	11.81	8.833333	12.24
GENERAL PARTNER	A partner in a PARTNERSHIP that is generally respon- sible for managing tactical and strategic operations, and who bears UNLIMITED LIABILITY for DEBTS incurred.	palgrave	13.28	17.4	0	15.38	17.5	13.38	19	21.27
GENERAL PARTNERSHIP (GP)	A form of unincorporated business organiza- tion that includes two or more general PARTNERS who manage the business operations and are ultimately liable for the organization’s LIABILITIES. Since the PARTNERSHIP is constituted as an UNLIMITED LIABILITY structure, the personal assets of the general partners can be used to settle any claims. In add- ition, each general partner is liable for the actions and liabilities of all other general partners. General partnerships are typically established as separate tax- paying entities. See also LIMITED PARTNERSHIP, SILENT PARTNERSHIP.	palgrave	20.38	14.6	15.9	15.54	14.6	9.5	13.5	14.33
GENSAKI	The broad Japanese MONEY MARKET, which includes trad- ing in short-term GOVERNMENT BILLS, CERTIFICATES OF DEPOSIT, NOTES, REPURCHASE AGREEMENTS, and REVERSE REPURCHASE AGREEMENTS.	palgrave	31.21	14.6	0	20.6	22.2	11.64	16.5	14.42
GHARAR	A form of RISK or uncertainty, as defined under the rules of ISLAMIC FINANCE. A cost-benefit review of contracts may be conducted by a religious scholar, and those that are found to contain an excessive or unneces- sary amount of risk may be prohibited. See also RIBA.	palgrave	55.54	9.4	11.9	8.93	8.6	10.13	10.166667	12.24
GHOSTING	A practice where two or more MARKET MAKERS attempt to jointly influence the price of a SECURITY; ghosting is illegal in many juris- dictions as market makers are meant to compete against each other.	palgrave	36.97	16.6	0	10.92	18.4	10.43	21	18.31

FORWARD FORWARD RATE

The FORWARD RATE used as a reference in a FORWARD RATE AGREEMENT or an INTEREST RATE FORWARD CONTRACT; it can be considered the interest rate for a certain period of time applicable to a certain future starting point.

palgrave

0

32.91

18.1

0

10.46

19.9

9.26

25

20.46

FORWARD MARGIN

See FORWARD POINTS.

palgrave

0

93.81

0.9

0

5.35

6.8

9.05

0.5

1.2

FORWARD MARKET

The general marketplace for ASSETS or financial CONTRACTS that are settled and delivered at a future time. See also FORWARD, SPOT MARKET.

palgrave

0

51.85

8.8

0

11.35

8.9

9.21

6.5

9.85

FORWARD POINTS

The differential between a SPOT RATE and FORWARD RATE in the FOREIGN EXCHANGE markets. Forward points arise as a result of INTEREST RATE DIFFERENTIALS, market expectations related to CURRENCIES and INTEREST RATES, and/or currency SUPPLY and DEMAND. While forward points can be computed as the difference between spot and forward currency rates, they can also be estimated via:where FXs is the spot currency rate, rdiff is the interest rate differential between the two currencies, t is the time to maturity (days), and RB is the rate basis (e.g., 360 or 365 days). Also known as FORWARD MARGIN.

palgrave

0

46.81

12.8

14.9

11.67

14.9

9.56

16.375

13.84

FORWARD PREMIUM

A FORWARD PRICE (or rate) for future delivery of an ASSET that is higher than the SPOT PRICE (or rate) for immediate delivery. See also FORWARD DISCOUNT.

palgrave

0

66.23

7.4

0

8.11

7.5

7.81

7.25

8.36

FORWARD PRICE

The price quoted for future delivery of an ASSET under a FORWARD or FUTURE, comprised of the SPOT PRICE and a positive or nega- tive COST OF CARRY; a quoted price may reflect a FORWARD PREMIUM or FORWARD DISCOUNT. The equilibrium, no-ARBITRAGE forward prices for various assets are given as follows:COMMON STOCK, no DIVIDENDS:F = S ertwhere S is the stock price, e is the exponential constant, r is a prevailing DISCOUNT RATE, and t is the time to MATURITY.Stock, continuous dividends:where δ is the DIVIDEND YIELD and all other terms are as defined above.Currency:F= Sp e (r1 – r2)twhere Sp is the spot price, r1 is the discount rate for currency 1, r2 is the dis- count rate for currency 2, and all other terms are as defined above.Commodity with LEASE market:where Μ is the lease payment rate and all other terms are as defined above.Commodity with carry market:where λ is the cost of storage and INSURANCE, and all other terms are as defined above.Commodity with carry market and CONVENIENCE YIELD:where cy is the convenience yield, and all other terms are as defined above. See also FORWARD RATE.

palgrave

0

16.29

26.6

18.9

10.69

32.8

11.2

32.5

28.48

FORWARD PRICE/EARNINGS RATIO

A PRICE/EARNINGS RATIO that is computed based on earnings forecasts of a company’s results rather than its historical results. The earnings estimates may be based on consensus forecasts from EQUITY ANALYSTS. See also TRAILING PRICE/EARNINGS RATIO.

palgrave

0

42.38

10.3

11.9

15.18

12.3

9.93

7.333333

12.58

FORWARD RATE

(1) The rate quoted for future delivery of an ASSET, used in the calculation of FORWARDS and FUTURES. A quoted forward rate mayreflect a FORWARD PREMIUM or FORWARD DISCOUNT. (2) See IMPLIED FORWARD RATE. (1) See also FORWARD PRICE.⎛ (r − r ) ∗ N ∗ (n / d )⎞⎝where rref is the reference fixing rate, rFRA is the FRA contract rate, N is the notional value of the contracts, n is the number of days in the contract period, d is the day count basis (360 or 365) Also known as INTEREST RATE FORWARD. See also FORWARD FORWARD RATE

palgrave

0

55.2

13.7

11.9

7.09

15.3

10.09

19

15.94

FORWARD RATE MODEL

A form of mathematical model used in the pricing of INTEREST RATE DERIVATIVES which uses and evolves randomly the entire FORWARD curve of the short rate. See also SHORT RATE MODEL.

palgrave

0

55.74

9.3

0

10.09

9.1

8.99

8.75

11.36

FORWARD START OPTION

An OVER-THE-COUNTER COMPLEX OPTION that is contracted on TRADE date t to commence on forward date t + 1, with the forward start date, STRIKE PRICE, and final MATURITY parameters established on trade date. Once the forward date is reached a conventional EUROPEAN OPTION comes into existence.

palgrave

0

48.13

12.3

0

12.77

15

10.27

15.75

15.29

FORWARD SWAP

An OVER-THE-COUNTER SWAP that is contracted on TRADE date t and commences on forward date t + 1, with the INTEREST RATE and final MATURITY parameters established on trade date. Once the forward date is reached a conventional fixed/floating INTEREST RATE SWAP comes into existence.

palgrave

0

40.69

13.1

0

12.88

14.8

10.47

16.25

15.16

FOUNDATION METHODOLOGY

A credit-based CAPITAL ALLOCATION process promulgated by the BANK FOR INTERNATIONAL SETTLEMENTS (BIS) under the INTERNAL RATINGS-BASED (IRB) APPROACH. BANKS use internal models to determine a COUNTERPARTY’S DEFAULT RISK, but use BIS- supplied RISK factors to estimate RISK EQUIVALENT EXPOSURE and LOSS- GIVEN DEFAULT in order to obtain estimates of EXPECTED CREDIT LOSS and UNEXPECTED CREDIT LOSS. CAPITAL is then allocated to cover the resulting exposure. See also ADVANCED METHODOLOGY.

palgrave

0

19.87

14.8

16.5

16.01

15.4

11.5

14.25

16.14

FRA

See FORWARD RATE AGREEMENT.

palgrave

0

75.88

3.7

0

10.15

8.8

7.78

1

1.6

FRACTIONAL BANKING

See FRACTIONAL RESERVE BANKING.

palgrave

0

33.58

9.6

0

15.95

13.5

15.68

2

11.6

FRANKFURT STOCK EXCHANGE

The primary STOCK EXCHANGE of Germany, founded in 1820 and now owned by DEUTSCHE BORSE, accounting for the majority of EQUITY TRADING in the country. The exchange sets prices on an AUCTION basis through BROKERS and, through separate divisions, deals in LARGE CAP, MID-CAP, and SMALL CAP STOCKS and GOVERNMENT BONDS.

palgrave

0

54.05

12.1

0

12.13

15.8

11.4

16.25

14.12

FRAUD

An act of intentional deception or dishonesty perpetrated by one or more individuals, generally for financial gain. See also EMBEZZLEMENT, ULENT MISREPRESENTATION.

palgrave

0

1.09

15.8

0

17.9

14.4

11.36

9

20.76

FRAUDULENT CONVEYANCE

The act of transferring ASSETS from one party (often an insolvent DEBTOR) to another party, with the express intent of keeping such assets away from CREDITORS or a BANKRUPTCY TRUSTEE or RECEIVER. Also known as FRAUDULENT TRANSFER. See also UNFAIR PREFERENCE.

palgrave

0

49.11

9.8

12.5

12.11

10.5

9.71

8.5

12.31

FRAUDULENT MISREPRESENTATION

A false CLAIM made by one party in order to gain economic advantage from a second party. Proof of misrepresenta- tion can result in termination of CONTRACTS. See also FRAUD.

palgrave

0

61.33

7.2

9.7

8.33

6.2

9.4

5.333333

9.33

FREDDIE MAC

See FEDERAL HOME LOAN MORTGAGE CORPORATION.

palgrave

0

31.55

10.4

0

14.95

11.4

11.83

4

15.73

FREE CAPITAL

In the United Kingdom, FREE FLOAT.

palgrave

0

90.77

2.1

0

5.27

4.3

0.3

2

2.4

FREE CASH FLOW

A CASH FLOW measure that is computed as OPERATING CASH FLOW less capital expenditures, or as NET INCOME plus DEPRECIATION, less changes in WORKING CAPITAL, less changes in capital expenditures.The resulting figure is generally considered to be an accurate reflection of a company’s true cash position. See also FINANCING CASH FLOW, FREE CASH FLOW TO EQUITY, FREE CASH FLOW TO FIRM, INVESTING CASH FLOW.

palgrave

0

22.08

18.1

0

13.24

19.5

9.66

25

21.55

FREE CASH FLOW TO EQUITY (FCFE)

Cash available to SHAREHOLDERS after all EXPENSES, INVESTMENTS, and INTEREST payments (after TAX) to DEBT holders have been made. It can be computed as OPERATING CASH FLOW less capital expenditures less debt payments. See also DISCOUNTED CASH FLOW VALUATION MODEL, FREE CASH FLOW TO FIRM.

palgrave

0

47.79

10.3

13.6

12.52

11.6

9.64

10.833333

14

FREE CASH FLOW TO FIRM (FCFF)

Cash available to BOND holders and SHAREHOLDERS after all EXPENSES and INVESTMENTS have been made. It can be computed as EARNINGS BEFORE INTEREST AND TAX times (1 – tax rate) plus DEPRECIATION less capital expenditures less changes in WORKING CAPITAL less changes in other ASSETS. See also DISCOUNTED CASH FLOW VALUATION MODEL, FREE CASH FLOW TO EQUITY.

palgrave

0

43.73

11.9

14.6

12.36

12.6

10.4

13.5

14.62

FREE FLOAT

SHARES of a company that are held by the public at large rather than by controlling or major SHAREHOLDERS. See also FREE CAPITAL.

palgrave

0

68.26

6.6

0

8.04

6.2

6.27

6.75

8.08

FREE MARKET ECONOMY

An economic system where the means of pro- duction and distribution are primarily owned by the private sector, and where government involvement is very limited. The economy encourages competi- tion and resource allocation and pricing is driven primarily by market forces of SUPPLY and DEMAND. Also known as MARKET ECONOMY.

palgrave

0

37.6

12.2

14.1

13.4

12.6

11.1

12

13.08

FREE ON BOARD (FOB)

The declared value of EXPORT goods, including the cost of production and transportation to the port of shipment. FOB does not include the cost of transportation from the port to the destination or the cost of INSURANCE, both of which are the responsibility of the importer. See alsoCOST, INSURANCE, FREIGHT (CIF).

palgrave

0

62.68

8.7

13

11.31

11.4

9.12

11.5

12.29

FREE RESERVES

Any cash RESERVES held by a regulated FINANCIAL INSTI- TUTION, such as a BANK, BUILDING SOCIETY, or SAVINGS AND LOAN, that exceed those required by the relevant REGULATOR.

palgrave

0

34.6

15.4

0

11.61

16.8

10.66

19

18.34

FREE RIDER

An UNDERWRITER or SYNDICATE member that retains a portion of a PRIMARY MARKET offering in order to sell at what it hopes will be a higher SECONDARY MARKET price; the practice is illegal in many markets.

palgrave

0

34.94

17.3

0

9.88

18.4

10.69

23

19.96

FREE TRADE

A process of exchanging goods, services, and resources without undue constraints, such as TARIFFS, surcharges, or QUOTAS.

palgrave

0

54.22

9.9

0

16.18

16.2

12.84

8.5

9.15

FREEZE-OUT

The process of persuading MINORITY INTERESTS of a TARGET company to sell their SHARES after a TENDER OFFER has been made. The intent behind the freeze-out is for the acquiring company to accumulate all shares so that the transfer is complete. See also DRAG ALONG RIGHTS, TAG ALONG RIGHTS.

palgrave

0

63.39

8.5

11.9

10.26

9.8

8.63

10.5

10.6

FRESH START ACCOUNTING

A revaluation of ASSETS and LIABILITIES that takes place when REORGANIZATION of a bankrupt company results ina general restatement of liabilities. The accounting is applied in the United States to any company operating under CHAPTER 11 that expects to complete a reorganization, as well as any company that is emerging from Chapter 11.

palgrave

0

19.2

17.2

0

13.64

17

10.02

19.25

15.13

FRICTION COST

See TRANSACTION COST.

palgrave

0

59.97

5.6

0

9.23

9.9

9.05

1.5

14.53

FRIENDLY SOCIETY

In the United Kingdom, a MUTUAL ORGANIZATION for savings and life INSURANCE that is owned and operated by its members; the organizational structure of the friendly society conveys certain TAX advan- tages to the mutual owners.

palgrave

0

18.02

19.7

0

13.41

21.6

11.12

25

21.07

FRIENDLY TAKEOVER

An ACQUISITION that is agreed on amicable terms between the acquiring company and the TARGET. A friendly takeover may arise as a result of negotiations between the two companies, or it may be a WHITE KNIGHT response to a HOSTILE TAKEOVER offer from another party.

palgrave

0

48.64

12.1

0

10.86

12.8

9.31

14.75

13.44

FRN

See FLOATING RATE NOTE.

palgrave

0

92.8

1.3

0

4.35

4.1

7.78

1

1.6

FRONT BOOK

A trading BOOK managed by a DEALER in which cus- tomer ORDERS are handled. The front book is intended to feature regular turn- over as the dealer places BIDS and OFFERS against customer orders. See alsoBACK BOOK.

palgrave

0

75.91

5.7

7.8

8.63

7.2

10.22

5.833333

7.08

FRONT DOOR

A process where the BANK OF ENGLAND attempts to influence UK MONEY SUPPLY by LENDING directly to DISCOUNT HOUSES and other financial institutions. See also BACK DOOR.

palgrave

0

49.31

9.7

0

11.77

9.8

11.32

7.75

11.33

FRONT LOAD

A mechanism in which COMMISSIONS on a MUTUAL FUND or INVESTMENT TRUST are charged to INVESTORS at the time of purchase. See also BACK LOAD.

palgrave

0

75.71

5.8

0

8.05

6.5

9.31

7.25

11.4

FRONT MONTH

See NEARBY CONTRACT.

palgrave

0

59.97

5.6

0

7.32

8.3

9.05

0.5

1.2

FRONT OFFICE

The units and functions within a BANK or FINAN- CIAL INSTITUTION that are responsible for generating REVENUES through LENDING, TRADING, CORPORATE FINANCE, ASSET MANAGEMENT, and so forth. See also BACK OFFICE.

palgrave

0

47.28

10.5

0

14.44

13.4

12.05

10.25

12.65

FRONT RUNNING

An illegal practice where a DEALER, MARKET MAKER, or SPECIALIST executes a transaction in advance of a customer trade in order to capture favorable price movements.

palgrave

0

36.63

14.6

0

13.35

16.8

11.61

18

18.09

FRONTING COMPANY

See FRONTING INSURER.

palgrave

0

59.97

5.6

0

9.23

9.9

14.31

1.5

14.53

FRONTING INSURER

An INSURER that is interposed between a CEDING INSURER or CAPTIVE, and a REINSURER. Use of a fronting insurer allows the insurer or captive to access the professional reinsurance market directly and obtain coverage at more favorable PREMIUM rates. Also known as FRONTING COMPANY.

palgrave

0

39.63

11.4

15

12.69

11.2

10.11

11.666667

14.06

FROTHY

A market condition reflecting excessive speculative buying or OVERBOUGHT conditions. Also known as TOPPY.

palgrave

0

22.07

11.9

0

17.35

13

13.01

5

17.09

FSA

see FINANCIAL SERVICES AUTHORITY.

palgrave

0

-8.73

15.5

0

18.85

15.9

15.68

3

21.6

FTC

See FEDERAL TRADE COMMISSION.

palgrave

0

33.58

9.6

0

13.05

11.2

11.73

3

21.6

FULL RECOURSE LOAN

A LOAN with repayment that may come from the proceeds of the project/ASSET being financed or the sale of specific COLLATERAL, or from the resources of the borrower if project/collateral CASH FLOWS prove insufficient. See also RECOURSE, NONRECOURSE, NONRECOURSE LOAN, PARTIAL RECOURSE LOAN.

palgrave

0

41.19

12.9

0

14.97

16.4

9.84

15.25

14.18

FULLY DILUTED BASIS

A method of computing a company’s EARNINGS PER SHARE by taking account of any potential new SHARES of COMMON STOCK that may be created through a planned NEW ISSUE of EQUITY, exercise of outstanding stock OPTIONS, or conversion of any existing CONVERTIBLE BONDS. See also DILUTION.

palgrave

0

48.13

12.3

0

12.13

14.1

11.64

17

18.77

FULLY PAID SHARES

The SHARES of a company that have been paid up to the full PAR VALUE at the time of initial issuance, and on which INVESTORS are not subject to a further call for CAPITAL. See also PARTLY PAID SHARES.

palgrave

0

77.06

7.4

0

6.38

7.9

6.63

10.75

7.8

FUND

A vehicle that is established to gather and invest CAPITAL provided by INVESTORS. A fund can take various structural forms, such as a PENSION , MUTUAL , HEDGE , CLOSED-END , OPEN-END , or UNIT INVESTMENT TRUST, and can be established to invest in spe- cific ASSET classes.

palgrave

0

41.19

12.9

0

11.43

14

11.68

16

14.18

FUND FAMILY

A group of diverse FUNDS offered by a single fund manage- ment company. INVESTORS allocating CAPITAL within a fund family can gen- erally switch between available funds without incurring incremental charges. The largest fund families are able to offer investors a broad range of investment choices, which can include global STOCK and BOND funds, sector funds, and emerging market funds.

palgrave

0

51.18

11.1

13

13.58

14.2

11.21

13

12

FUND MANAGER

See PORTFOLIO MANAGER.

palgrave

0

9.21

12.7

0

11.15

11.5

9.05

2.5

14.53

FUND OF FUNDS (FOF)

A FUND that invests in other MUTUAL FUNDS or HEDGE FUNDS. In exchange for vetting individual funds and constructing, and tactically adjusting, PORTFOLIOS to achieve specific RETURNS, fund of fund managers charge their clients an annual fee and a performance fee. See also 1 AND 10.

palgrave

0

55.95

9.3

13

11.13

10.4

11.6

10.666667

13.95

FUNDAMENTAL ANALYSIS

An INVESTMENT ANALYSIS approach that focuses on a company’s financial and ACCOUNTING value and its abil- ity to generate core operating EARNINGS in order to increase the STOCKprice. Fundamental analysts advocate the purchase of stocks selling below LIQUIDATION VALUE, which may be evidenced by a low PRICE/EARNINGS RATIO and CURRENT ASSETS that exceed CURRENT LIABILITIES and long- term DEBT. See also TECHNICAL ANALYSIS.Additional reference: Graham and Dodd (1962).

palgrave

0

23.05

15.7

16.7

16.13

17.6

12.89

17

19.08

FUNDAMENTAL FACTOR MODEL

A MULTIFACTOR RISK MODEL with inputs that include historical STOCK RETURNS and observable industry factors, such as PRICE/EARNINGS ratios, price/BOOK VALUE, economic growth, and so forth. The sensitivity of a stock price to each fundamental factor can be estimated through such a model, allowing the projection of EXPECTED RETURNS. See also MACROECONOMIC FACTOR MODEL, STATISTICAL FACTOR MODEL.

palgrave

0

26.81

14.2

15

16.01

16

10.95

13.833333

16.72

FUNDED DEBT

(1) Any DEBT obligation issued by a sovereign authority that need not be repaid, i.e., an instrument that exists in PERPETUITY, such as a CONSOL. (2) Any debt obligation of a company or sovereign authority that matures in more than one year.

palgrave

0

28.85

19.7

0

9.71

22

10.98

30

21.56

FUNDED PENSION PLAN

A PENSION PLAN where all future LIABILITIES are fully covered by existing fund resources. See also UN.

palgrave

0

54.39

7.8

0

9.3

6.7

11.49

4.25

8.11

FUNDING

The general process of raising DEBT to finance operations.

palgrave

0

45.42

9.2

0

12.5

9.3

12.86

5.5

8.04

FUNDING LIQUIDITY RISK

The RISK of loss arising from an inability to roll over existing unsecured funding or obtain new unsecured funding without incurring a large cost. A subcategory of LIQUIDITY RISK. See alsoASSET LIQUIDITY RISK, ASSET-FUNDING LIQUIDITY RISK, ENDOGENOUS LIQUIDITY, EXOGENOUS LIQUIDITY.

palgrave

0

15.68

14.4

15.9

16.05

13.9

9.82

11.666667

14.32

FUNGIBILITY

The ability to exchange or substitute one ASSET with another. Fungibility is important in COLLATERAL management for OVER-THE- COUNTER DERIVATIVES and REPURCHASE AGREEMENTS, and in delivery decisions for EXCHANGE-TRADED DERIVATIVES.

palgrave

0

5.49

16.2

0

20

17.8

10.7

14

18

FUNGIBLE ISSUE

A SECURITY that can be exchanged for an identical or similar security of the same ISSUER.

palgrave

0

38.32

11.9

0

8.87

8.4

9.36

12

13.9

FURTHEST MONTH

An EXCHANGE-TRADED DERIVATIVE CONTRACT with the longest MATURITY date featuring trading volume; contracts with even longer maturity dates that are inactive or dormant are not considered to be the furthest month contract. See also NEARBY CONTRACT, NEXT NEARBY CONTRACT.

palgrave

0

34.76

13.3

0

16.19

16.1

10.68

13.25

12.93

FUTURE VALUE

A financial computation where the value of a current CASH FLOW or lump sum is projected into the future through use of an appropriate RETURN or YIELD. The general form of the equation is given as:where CF0 is the current cash flow, t is the time to MATURITY, and r is the DISCOUNT RATE or yield.The future value of a cash flow that is subject to CONTINUOUS COMPOUNDING is given as:where e is the exponential constant, N is the number of years over which the compounding occurs.The base computation for multiple cash flows occurring over time expands to:FV = ∑ CFt (1 + r )n −twhere n is the last period of the cash flows.The future value of a stream of cash flows, such as those characterizing an ANNUITY, can be computed through an extension of the same equation:(1⎣where CFP is the periodic future cash flow and other terms are as defined above. See also DISCOUNTED CASH FLOW, NET PRESENT VALUE, PRESENT VALUE.

palgrave

0

25.43

23.1

18.2

9.82

27.4

10.22

32

25.7

FUTURES CALL

An EXCHANGE-TRADE OPTION CONTRACT granting the buyer the right, but not the obligation, to buy a FUTURES contract at a pre- specified STRIKE PRICE. See also FUTURES PUT.with CLEARING MEMBERS on behalf of clients. FCMs are the only entities, apart from CLEARINGHOUSES, that can hold customer funds. In the United States, FCMs must meet certain minimum financial requirements and must be members of the National Futures Association, a SELF-REGULATORY ORGANIZATION; they may be structured as independent organizations or divisions of larger financial institutions.

palgrave

0

33.44

13.8

14.9

15.14

16.1

10.38

14.625

15.55

FUTURES OPTION

An EXCHANGE-TRADE OPTION CONTRACT granting the buyer the right, but not the obligation, to buy or sell a FUTURES contract at a prespecified STRIKE PRICE. See also FUTURES CALL, FUTURES PUT.

palgrave

0

64.2

8.2

0

11.08

10.5

8.48

8.25

8.78

FUTURES PUT

An EXCHANGE-TRADED OPTION CONTRACT granting the buyer the right, but not the obligation, to sell a FUTURES contract at a pre- specified STRIKE PRICE. See also FUTURES CALL.

palgrave

0

65.73

7.6

0

10.9

10

9.97

7.5

8.46

FX

See FOREIGN EXCHANGE.

palgrave

0

59.97

5.6

0

9.23

9.9

9.05

0.5

1.2

G3

See GROUP OF 3.

palgrave

0

118.18

-2.3

0

-7.26

-5.4

7.78

1

1.6

G7

See GROUP OF 7.

palgrave

0

118.18

-2.3

0

-7.26

-5.4

7.78

1

1.6

G8

See GROUP OF 8.

palgrave

0

118.18

-2.3

0

-7.26

-5.4

7.78

1

1.6

G10

See GROUP OF 10.

palgrave

0

118.18

-2.3

0

-5.81

-4.2

7.78

1

1.6

GAAP

See GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

palgrave

0

-35.13

19.4

0

24.68

19.7

16.52

5.5

34

GAMING

The act of taking advantage of information gained through PINGING to position an ORDER to capitalize on of a known large BID or OFFER residing in a DARK POOL. While not illegal, dark pool operators attempt to guard their pools from pinging and gaming, often by establishing minimum order size and tracking TRADING patterns of participants.

palgrave

0

34.6

15.4

0

12.02

16.4

10.1

19

18.34

GAMING CONTRACT

An agreement to enter into a game of chance for money. In certain jurisdictions DERIVATIVES may be defined as gaming con- tracts. Also known as WAGERING CONTRACT.

palgrave

0

62.34

6.8

8.8

9.31

6.8

9.35

4.5

8.04

GAMMA

The change in the value of an OPTION’s DELTA for a change in the value of the UNDERLYING market reference, all other variables held constant. Gamma, as a measure of the CONVEXITY of option prices, is often used to gauge sensitivity to large and sudden market moves. The gammas of the CALL OPTION and PUT OPTION under the BLACK-SCHOLES MODEL are identical and given by:11whereand S is the stock price, t is the time to MATURITY, σ is the STANDARD DEVIATION, and where the value of N′(d1) can be obtained from a standard table of PROBABILITY functions.The gammas of long and short puts and calls are shown as:See also GAMMA HEDGE, NEGATIVE GAMMA, GREEKS, RHO, THETA, VEGA.

palgrave

0

40.35

17.3

13.6

9.76

20.4

10.7

19.666667

18.68

GAMMA HEDGE

A HEDGE technique used to establish a GAMMA NEUTRAL position, and used primarily to manage the effects of NEGATIVE GAMMA, which can create large losses if markets move sharply and quickly before DELTA HEDGES can be rebalanced. Creating a hedge for a negative gamma position generally requires the purchase or use of a position with POSITIVE GAMMA (e.g., an instrument with positive CONVEXITY, such as a LONG POSITION in a CALL OPTION or PUT OPTION).

palgrave

0

24.95

19.1

0

11.56

20.9

11.18

26.25

20.33

GAMMA NEUTRAL

A PORTFOLIO of OPTIONS that is neutral with respect toits GAMMA, meaning that it is HEDGED for large moves in the UNDERLYING. G See also DELTA NEUTRAL, GAMMA HEDGE, VEGA NEUTRAL, THETA NEUTRAL.

palgrave

0

63.19

8.5

0

9.68

9.8

11.63

8.25

9.02

GAO

See GOVERNMENT ACCOUNTABILITY OFFICE.

palgrave

0

-34.11

19

0

24.65

20.6

7.78

3

11.6

GAPPING

The process of deliberately mismatching ASSETS and LIABILITIES in order to take advantage of an anticipated change in INTEREST RATES. Although gapping has the potential of generating greater RETURNS, it can also increase a firm’s potential losses via DIRECTIONAL RISK, CURVE RISK, and/ or LIQUIDITY RISK. See also ASSET-LIABILITY MANAGEMENT, GAP, RATE-SENSITIVE ASSETS, RATE-SENSITIVE LIABILITIES.

palgrave

0

10.6

16.3

17.52

17.1

12.3

14.5

16.77

GARMAN-KOHLHAGEN MODEL

A closed-form OPTION pricing model developed by Garman and Kohlhagen that is used to value EUROPEANOPTIONS on CURRENCIES. The model is an adaptation of the BLACK-SCHOLES MODEL. The equations are given as:andwhere S is the current EXCHANGE RATE (domestic currency per unit of for- eign currency), X is the STRIKE PRICE, t is the time to MATURITY, r is the CONTINUOUSLY COMPOUNDED domestic INTEREST RATE, q is the con- tinuously compounded foreign interest rate,2

palgrave

0

37.94

14.1

15.9

12.31

15.6

11.9

17.333333

15.83

GATE

A restriction imposed by a HEDGE FUND that limits the amount of REDEMPTIONS that can occur in a given period. A fund may be gated when the manager is attempting to preserve CAPITAL and avoid an acceleration of redemptions that would otherwise lead to forced disposal of ASSETS.

palgrave

0

47.12

12.7

0

10.57

13.1

10.09

17

14.6

GATHER IN THE STOPS

Concentrated selling to drive a SECURITY price down to levels where STOP ORDERS are known to exist. This forces the stop orders to convert into buy or sell MARKET ORDERS, clearing the way for further upward or downward moves once executed. See alsoSNOWBALLING.

palgrave

0

49.65

11.7

0

11.6

13.2

9.48

12.75

12.32

GAUSSIAN DISTRIBUTION

See NORMAL DISTRIBUTION.

palgrave

0

9.21

12.7

0

15.03

14.6

14.31

1.5

14.53

GC

See GENERAL COLLATERAL.

palgrave

0

-24.64

17.4

0

13.12

13

9.05

2.5

14.53

GDP DEFLATOR

A measure designed to express current GROSS DOMESTIC PRODUCT (GDP) in terms of GDP in a base year, effectively providing a gauge of INFLATION. It is computed as:where GDPnom is the current period GDP, GDPreal is the base year GDP. Also known as IMPLICIT PRICE DEFLATOR.

palgrave

0

55.95

9.3

12.5

9.39

9.2

10.57

10.333333

13.08

GDR

See GLOBAL DEPOSITORY RECEIPT.

palgrave

0

-8.73

15.5

0

14.5

12.4

15.68

2

11.6

GDS

See GLOBAL DEPOSITORY SHARE.

palgrave

0

8.2

13.1

0

11.6

10

11.73

2

11.6

GEARING

See LEVERAGE.

palgrave

0

77.91

2.9

0

1.3

7.8

11.63

0

0.8

GEISHA

A PRIVATE PLACEMENT, denominated in a CURRENCY other than Japanese yen, which is issued by a Japanese company. See alsoDAIMYO, SAMURAI, SHIBOSAI, SHOGUN.

palgrave

0

34.42

11.3

0

12.8

11.2

11.76

8.25

13.3

GEMM

See GILT-EDGED MARKET MAKER.

palgrave

0

50.5

7.2

0

10.15

10

15.68

1

1.6

GENERAL AGREEMENTS TO BORROW

Agreements between GROUP OF 10 countries plus Switzerland to provide the INTERNATIONAL MONETARY FUND with LOANS on an emergency basis, which the IMF can then lend on to member countries in need of funds.

palgrave

0

45.43

15.4

0

11.96

19.1

11.82

20

17.13

GENERAL COLLATERAL (GC)

COLLATERAL in the REPURCHASE AGREEMENT market that is in abundant SUPPLY and which does not there- fore allow a repurchase agreement BORROWER to obtain a lower than normal BORROWING rate. See also SPECIAL.

palgrave

0

46.27

10.9

0

12.29

11.5

10.2

10.75

11.45

GENERAL EQUILIBRIUM

A MICROECONOMIC framework that focuses on SUPPLY, DEMAND, and prices of individual markets, and how these interact simultaneously at a macroeconomic level. Multiple strands of study support this theory, including theories based on partial equilibrium, competitive equi- librium, and price transfer equilibrium.

palgrave

0

7.86

17.4

0

18.62

19.2

13.7

17.5

20.78

GENERAL INSURANCE

In the United Kingdom, INSURANCE coverage for damage or loss to property. The UK market is broadly segmented into the three areas: large commercial RISK coverage (for large companies and unique risks, such as those UNDERWRITTEN through LLOYD’S OF LONDON), commerciallines (including small business properties), and personal lines (including home and automobile coverage for individuals). See also NONLIFE INSURANCE, PROPERTY AND CASUALTY INSURANCE.

palgrave

0

24.78

15

17.9

16.88

17.9

10.44

17.166667

16.65

GENERAL OBLIGATION (GO) BOND

In the United States, a MUNICIPAL BOND issued by a state or local authority that is typically used to finance nonrevenue-producing projects, such as schools and transportation systems. Bonds are generally repaid through the issuance of new DEBT or via TAX REV- ENUES. See also REVENUE BOND.

palgrave

0

55.54

9.4

11.2

11.66

10.8

11.81

8.833333

12.24

GENERAL PARTNER

A partner in a PARTNERSHIP that is generally respon- sible for managing tactical and strategic operations, and who bears UNLIMITED LIABILITY for DEBTS incurred.

palgrave

0

13.28

17.4

0

15.38

17.5

13.38

19

21.27

GENERAL PARTNERSHIP (GP)

A form of unincorporated business organiza- tion that includes two or more general PARTNERS who manage the business operations and are ultimately liable for the organization’s LIABILITIES. Since the PARTNERSHIP is constituted as an UNLIMITED LIABILITY structure, the personal assets of the general partners can be used to settle any claims. In add- ition, each general partner is liable for the actions and liabilities of all other general partners. General partnerships are typically established as separate tax- paying entities. See also LIMITED PARTNERSHIP, SILENT PARTNERSHIP.

palgrave

0

20.38

14.6

15.9

15.54

14.6

9.5

13.5

14.33

GENSAKI

The broad Japanese MONEY MARKET, which includes trad- ing in short-term GOVERNMENT BILLS, CERTIFICATES OF DEPOSIT, NOTES, REPURCHASE AGREEMENTS, and REVERSE REPURCHASE AGREEMENTS.

palgrave

0

31.21

14.6

0

20.6

22.2

11.64

16.5

14.42

GHARAR

A form of RISK or uncertainty, as defined under the rules of ISLAMIC FINANCE. A cost-benefit review of contracts may be conducted by a religious scholar, and those that are found to contain an excessive or unneces- sary amount of risk may be prohibited. See also RIBA.

palgrave

0

55.54

9.4

11.9

8.93

8.6

10.13

10.166667

12.24

GHOSTING

A practice where two or more MARKET MAKERS attempt to jointly influence the price of a SECURITY; ghosting is illegal in many juris- dictions as market makers are meant to compete against each other.

palgrave

0

36.97

16.6

0

10.92

18.4

10.43

21

18.31