Month: September 2020

The 3-6-3 rule is slang that refers to an unofficial rule in the banking industry that alludes to the condition of being noncompetitive and simplistic.

Underlying, when referred to in reference to equity trading, is the common stock that must be delivered when a warrant is exercised, or when a convertible bond or convertible preferred share is converted to common stock. The price of the underlying is the main factor that determines the prices of derivative securities, warrants, and convertibles. Therefore, a change in the price of the underlying results in a simultaneous change in the price of the derivative asset linked to it.

Opening cross refers to a method the Nasdaq uses to determine the opening price for an individual stock. This method accumulates data on the buy and sell interest among market participants for a particular security two minutes before the market open. The Nasdaq makes this information available to all investors.

The 3-6-3 rule is slang that refers to an unofficial rule in the banking industry that alludes to the condition of being noncompetitive and simplistic.

In options trading, Lamba is the Greek letter assigned to variable which tells the ratio of how much leverage an option is providing as the price of that option changes. This measure is also referred to as the leverage factor, or in some countries, effective gearing. Lambda tells what ratio of leverage the option will provide as the price of the underlying asset changes by one percent.

The expenditure method is a system for calculating gross domestic product (GDP) that combines consumption, investment, government spending, and net exports. It is the most common way to estimate GDP. It says everything that the private sector, including consumers and private firms, and government spend within the borders of a particular country, must add up to the total value of all finished goods and services produced over a certain period of time. This method produces nominal GDP, which must then be adjusted for inflation to result in the real GDP. read more

A required minimum distribution (RMD) is the amount of money that must be withdrawn from a traditional IRA, SEP, or SIMPLE individual retirement account (IRA) by owners and qualified retirement plan participants of retirement age.

A whole life annuity due is a financial product sold by insurance companies that requires annuity payments at the beginning of each monthly, quarterly, or annual period, as opposed to at the end of the period. This is a type of annuity that will provide the holder with payments during the distribution period for as long as he or she lives. After the annuitant passes on, the insurance company retains any funds remaining.

Price stickiness (or sticky prices) is the resistance of market price(s) to change quickly despite changes in the broad economy that suggest a different price is optimal. Sticky is a general economics term that can apply to any financial variable that is resistant to change. When applied to prices, it means that the prices charged for certain goods are reluctant to change despite changes in input cost or demand patterns.

A senior bank loan is a debt financing obligation issued to a company or an individual by a bank or similar financial institution that holds legal claim to the borrower’s assets above all other debt obligations. Because it is considered senior to all other claims against the borrower, in the event of a bankruptcy it will be the first loan to be repaid before any other creditors, preferred stockholders, or common stockholders receive repayment. Senior bank loans are usually secured via a lien against the assets of the borrower. read more