Negative convexity exists when the shape of a bond’s yield curve is concave. A bond’s convexity is the rate of change of its duration, and it is measured as the second derivative of the bond’s price with respect to its yield. Most mortgage bonds are negatively convex, and callable bonds usually exhibit negative convexity at lower yields.
A press conference is an event organized to officially distribute information and answer questions from the media. Press conferences are also announced in response to specific public relations issues.
A loan shark is a person who – or an entity that – loans money at extremely high interest rates and often uses threats of violence to collect debts. The interest rates are generally well above an established legal rate, and often loan sharks are members of organized crime groups.
Put-call parity is a principle that defines the relationship between the price of European put options and European call options of the same class, that is, with the same underlying asset, strike price, and expiration date.
Wrongful dishonor refers to a bank’s failure to honor a valid negotiable instrument, such as a check or draft that has been presented to it for payment. If the check is valid and there are sufficient funds in the account to cover it, a bank’s failure to honor it within the time period stipulated by the Uniform Commercial Code (UCC) would constitute wrongful dishonor.
Forensic accounting utilizes accounting, auditing and investigative skills to conduct an examination into the finances of an individual or business. Forensic accounting provides an accounting analysis suitable to be used in legal proceedings. Forensic accountants are trained to look beyond the numbers and deal with the business reality of a situation. Forensic accounting is frequently used in fraud and embezzlement cases to explain the nature of a financial crime in court.
Elastic is a term used in economics to describe a change in the behavior of buyers and sellers in response to a change in price for a good or service. In other words, demand elasticity or inelasticity for a product or good is determined by how much demand for the product changes as the price increases or decreases. An inelastic product is one that consumers continue to purchase even after a change in price. The elasticity of a good or service can vary according to the number of close substitutes available, its relative cost, and the amount of time that has elapsed since the price change occurred.
An overallotment is an option commonly available to underwriters that allows the sale of additional shares that a company plans to issue in an initial public offering or secondary/follow-on offering. An overallotment option allows underwriters to issue as many as 15% more shares than originally planned. The option can be exercised within 30 days of the offering, and it does not have to be exercised on the same day.
Import substitution industrialization is a theory of economics typically adhered to by developing countries or emerging-market nations that seek to decrease their dependence on developed countries. The theory targets the protection and incubation of newly formed domestic industries to fully develop sectors so that the goods produced are competitive with imported goods. Under ISI theory, this process makes local economies, and their nations, self-sufficient.
Interest is the charge for the privilege of borrowing money, typically expressed as annual percentage rate (APR). Interest can also refer to the amount of ownership a stockholder has in a company, usually expressed as a percentage.