A zero-coupon bond, also known as an accrual bond, is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity when the bond is redeemed for its full face value.
What is Yield Curve/term Structure?
If interest rates are plotted on a graph, with time on the x-axis and the rate on the y-axis, the resultant curve is called the yield curve or term structure.
What is Volatility?
Volatility come in two types, namely: 1. Historic volatility: this is the yearly standard deviation of a product’s price. The more it goes up and down in price, the higher the measure of volatility becomes. 2. Implied volatility: since volatility is a measure of risk, it is used to input models to price options. Therefore if the […]
What is the VIX?
The Cboe Volatility Index (VIX) is a real-time index representing the market’s expectations for the relative strength of near-term price changes of the S&P 500 index (SPX).
What is Value-at-risk (VAR)?
VAR is a risk management technique that measures and quantifies the level of financial risk within a firm, portfolio, or position for a given holding period and confidence interval.
What is Treasury Bill?
This refers to a short-term debt instrument with a maximum maturity of twelve months issued by a government.
What is Trading Book?
The portfolio where trading positions are recorded when financial instruments are purchased and sold regularly by traders is called the trading book.
What is Trading?
Trading is generally known as the process of purchasing and selling financial instruments frequently.
What is Synthetic Collateralized Debt Obligation?
This is a type of collateralized debt obligation that uses credit default swaps as the assets in the special purpose vehicle.
What is Synthetic?
This is a general term used in financial markets to describe the framework of a financial instrument or product using unoriginality.
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