Arbitrage is the process of exploiting differences in the price of an asset by simultaneously buying and selling it.In the process the arbitrageur pockets a risk-free return.
The Bovespa Index tracks around 50 stocks traded on the São Paulo Stock, Mercantile & Futures Exchange.The term Bovespa is derived from BOlsa de Valores do Estado de São Paulo, the Portugese name for the exchange.
The CAC 40 Index is the benchmark tracking index for the Paris Bourse. Started in December of 1987 with a value of 1000, the CAC 40 is comprised of the 40 largest and most liquid stocks trading on the exchange.
A Canada Learning Bond offers money to Canadian families to help them start saving for college. In general, under the program, the Canadian government gives families $500 in the form of a bond to start saving for college.
A Canadian rollover mortgage is an adjustable-rate mortgage commonly available to homebuyers in Canada. An adjustable-rate mortgage (ARM) is a mortgage in which the interest rate varies.
Capital flight is the movement of capital from one country to another, or sometimes from one investment sector to another, to capitalize on returns or mitigate risk. Let's say the Venezuelan government is overthrown.
The DAX Index is the most commonly cited benchmark for measuring the returns posted by stocks on the Frankfurt Stock Exchange. Started in 1984, the DAX index is comprised of the 30 largest and most liquid issues traded on the exchange.
A dual listing occurs when a security (or shares of a company) is listed on more than one stock exchange.It may also be referred to as cross-listing or interlisting.
EAFE stands for Europe, Australasia, and the Far East -- a region that is considered the most developed outside of North America.The Morgan Stanley Capital International (MSCI) EAFE index is the most common way to track the performance of stocks in the EAFE markets.
An embargo is a government-instituted prevention of exports to a certain country. In the media world, an embargo is the release of information with the condition that it cannot be published or disseminated before a certain date.
An emerging market economy describes a nation's economy that is progressing toward becoming more advanced, usually by means of rapid growth and industrialization.These countries experience an expanding role both in the world economy and on the political frontier.
Euro Interbank Offered Rate (EURIBOR), is the rate at which European banks offer to lend unsecured funds to each other in the euro market. EURIBOR is sponsored by the European Banking Federation which represents some 5,000 banks and by the Financial Markets Association.
A eurobank is a financial institution that makes loans and accepts deposits in foreign currencies -- simplifying international trade, transactions and investing. If an American company wants to buy parts from a European company, it can use a eurobank to obtain the proper currency.
Europe, Australasia, Far East (or EAFE) refers to the economically developed regions of the world outside the United States and Canada. The EAFE is a broad market cap-weighted index that was formulated by Morgan Stanley Capital International (MSCI) to represent equity market performance in the developed world beyond North America.
The European Credit Research Institute (ECRI) provides analyses of retail financial services markets within the member states of the European Union. The ECRI is an independent, non-profit research institute founded in 1999 by a group of European banking and financial institutions.
The Financial Times 100 Index (FTSE), also known as the "footsie," is the most widely used benchmark for the performance of equities traded on the London Stock Exchange.Started in January 1984 with an initial value of 1,000, the index contains the 100 largest U.K.-domiciled companies traded on the London Stock Exchange (based on market capitalization).
Frontier market describes up-and-coming economies that tend to be smaller and less developed than emerging markets like China and India. Frontier markets have a poor population willing to work to thrust itself into a middle class and, with luck, they also have access to a deep cache of natural resources and an appetite for export dollars.
Gnomes of Zurich is a slang, and often derogatory, term referring to Swiss bankers. A gnome is a mythical greedy creature that lives underground and guards money.
In the investing world, the Halloween Massacre occurred in October 2006, when Canada began taxing all income trusts in the country. Many oil companies created income trusts in Canada, and they issued popular high-yield securities.
The Hang Seng Index is the leading index for shares traded on the Hong Kong Stock Exchange. Started in 1969, the Hang Seng Index consists of the 45 largest companies that trade on the Hong Kong Stock Exchange, representing about 67% of its total market capitalization. The index is maintained by a subsidiary of Hang Seng Bank.To qualify for selection to the index, a company must be among those that comprise the top 90% of the total market value of all ordinary shares, as well as those that comprise the top 90% of the total turnover on the Stock Exchange of Hong Kong Limited (SEHK).
The Ifo Business Climate Survey is a monthly measure of German business activity. The Ifo Business Climate Survey incorporates over 5,000 monthly survey responses from a variety of companies.
An international banking facility (IBF) is a segregated branch of a domestic bank or financial institution available to only foreign customers. International banking facilities provide a range of lending and multicurrency depository services, but only to foreign residents and institutions.
The phrase irrational exuberance was coined by Alan Greenspan, chairman of the Federal Reserve, in a December 5, 1996, speech to the American Enterprise Institute.In the speech, Greenspan asked, “How do we know when irrational exuberance has unduly escalated asset values which then become the subject of unexpected and prolonged contractions as they have in Japan over the past decade?
Jurisdiction risk is the risk of doing business in another country. Let's assume you are considering purchasing a bond issued by a Canadian company or a bond issued by a Nigerian company.
Kangaroos are slang for Australian stocks. For example, if Company XYZ is an Australian company whose stock trades on the Sydney exchange, it is a kangaroo.
The Korea Exchange (KRX) is the only securities exchange in South Korea.The KRX is headquartered in the city of Busan.
The Korean Composite Stock Price Index (KOSPI) is the main tracking index in South Korea. The KOSPI Index is comprised of 200 of the largest and most liquid issues traded on the Korean Stock Exchange.
The large value transfer system (LVTS) is a wire system in Canada that allows banks to transfer funds among each other. The Bank of Canada and the country's department of finance developed the LVTS, which is now owned by the Canadian Payments Association.
In the securities industry a lead bank is a company, usually an investment bank, that helps companies introduce their new securities into the market by leading a syndicate of investment banks to issue the securities. When a company decides it wants to issue stock, bonds, or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process.
Macro risk is the risk that the political activity in a country will affect the operations of foreign companies that do business in that country. For example, let's say the government of the country of Cyprus is facing a fiscal crisis and decides to seize a portion of all the money in bank accounts held in the country.
Managed currency is the opposite of currency whose exchange rate is determined by the amount of supply and demand for the currency in the global marketplace.Most currencies, however, are managed by their central banks to some degree in order to achieve or maintain economic stability.
Market arbitrage is a trading strategy whereby a trader sells a security in one market and buys the same security in another market. The practice of market arbitrage is based on assuming that an asset traded worldwide is priced differently in different markets.
Mrs.Watanabe, also referred to as "Japanese Housewives," is a slang term for small, retail investors in Japan.
An ocean bill of lading is a receipt and invoice between a carrier and a shipper. For example, let's assume that Company XYZ is in Seattle and it wants to purchase goods from Supplier ABC in China.
The Office of Foreign Assets Control is the entity within the U.S.Treasury Department that creates and enforces trade sanctions.
In the banking world, Old Lady is a nickname for the Bank of England.The full nickname is "Old Lady of Threadneedle Street." The Bank of England is the United Kingdom's central bank, meaning that it is a bank for banks and works closely with the government's treasury.
A pegged exchange rate, also known as a fixed exchange rate, is a type of exchange rate in which a currency's value is fixed against either the value of another country's currency or another measure of value, such as gold. Generally, there are two ways in which countries can value their currency in the world market.
The Eurozone nations of Portugal, Ireland, Italy, Greece and Spain make up a group of financially weak countries often referred to in the financial media by the acronym PIIGS. The Eurozone is made up of 16 different countries that all use a single currency, the Euro.
A qualified domestic institutional investor (QDII) is an institution allowed to invest in foreign securities. China runs one of the most well known QDII programs.There, the China Securities Regulatory Commission allows qualified banks, mutual funds and other investment companies to invest in foreign securities.
A qualifying transaction occurs when a private company issues publicly traded stock in Canada. For example, let's assume Company XYZ is a Canadian company that is privately held.
Revaluation refers to the adjustment of the exchange rate of a country's currency. In countries with fixed exchange rate rates, the central bank (i.e.
A saitori is a member of the Tokyo Stock Exchange who matches buy and sell orders. Saitori are similar to specialists in the New York Stock Exchange.
The Shanghai Composite Index tracks the biggest and most important public companies in China. The Shanghai Composite Index is similar to the Dow Jones Industrial Average (DJIA) in the U.S.
The SSE Composite Index tracks the largest and most important public companies in China. The SSE Composite Index is similar to the Dow Jones Industrial Average (DJIA) in the U.S. The SSE Composite Index is one of the most closely-watched global benchmarks.
The Stock Exchange Daily Official List code is a unique identifier generated by the London Stock Exchange for securities issued in the U.K. Each U.K.-issued security traded on the London Stock Exchange is assigned a distinct code which identifies it on the Stock Exchange Daily Official List (SEDOL).
The Straits Times Index is Singapore's premier equity index and the most widely used benchmark for the performance of equities traded on the Singapore Stock Exchange. The index is comprised of 55 of the exchange's most valuable firms.
The TED spread was originally calculated as the difference between interest rates on 3-month T-bills and 3-month Eurodollar contracts with identical expiration months.The acronym is derived from the word "Treasuries" and the ticker symbol for Eurodollars, which is ED.
Transaction risk is the risk that a company will incur losses in a transaction comprising multiple currencies due to exchange rate movements. Companies often engage in transactions involving more than one currency.
A traveler's check is a certified note issued by a bank that may be used by travelers as a risk-free substitute for paper currency. When individuals travel, particularly abroad, they often need cash to cover certain expenses.
Umberto Agnelli was a well-known chairman of Italian automaker Fiat -- the famous maker of the Fiat and the Ferrari. Born in Lausanne, Switzerland, in 1934, Agnelli was one of seven children.
In a Walrasian market, buy and sell orders are grouped together and then executed at specific times, rather than executed one by one continuously. Let's assume that the following buy orders for Company XYZ stock are received: Buy 1,000 shares @ $4.25 Buy 500 shares @ $4.00 Buy 700 shares @ $4.50 Buy 500 shares @ $4.25 Sell 1,000 shares @ $4.25 Sell 500 shares @ $4.00 Sell 700 shares @ $4.50 Sell 500 shares @ $4.25 In a Walrasian market, the buy orders are grouped together and executed at a price and time that will clear most of those orders.
In a brokerage firm, a wire room receives customer orders from brokers, sends the orders to the exchanges, and sends back notices of execution. For instance, let's say John Doe is a broker at Brokerage XYZ.
The World Bank is an international financial institution dedicated to reducing poverty around the world through capital investment and the facilitation of trade. Based in Washington, D.C., the World Bank is funded and managed by several member countries, with the United States providing the majority of funding and holding the highest percentage of voting power.
Xetra is a trading system owned by the Deutsche Borse (German stock exchange). Started in 1997, about 250 participants (mostly brokerages, dealers, and market makers) in 19 countries use Xetra, which is an electronic trading system for stocks, bonds, warrants, ETFs and other securities.
The ZEW Economic Sentiment is a monthly survey of economic sentiment in Germany.(The acronym stands for Zentrum für Europäische Wirtschaftsforschung GmbH, or Centre for European Economic Research.) The ZEW was founded in 1990 by the German government in conjunction with Mannheim University.