A forwards contract is a highly customizable derivate contract that allows both the buyer and seller to buy and sell the underlying asset at an agreed-upon price. The nature of the forward’s contracts makes it ideal for hedging against any volatility in the market. But, the forward contracts have also been used in the past …
Forwards Vs. Future Contracts – The Key Differences You Should Know Read More »
Ask and bid can be termed as two different sides of the same coin. Both of these are important for the smooth functioning of trading in a market. Without any one of these, the markets would not function smoothly. Bid A bid can be defined as the maximum amount a buyer is willing to pay …
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General obligation bonds are municipal bond which are backed by the ability of Government agency/entity to earn the revenue. The revenue can be made by the Government agency/entity in the form of tax revenues or any operating income from the projects. So, there is no collateral for the bonds but the creditworthiness of the governmental …
How Does a General Obligation Bond Work? (Detail Explanation) Read More »
Variation margin The variation margin is an additional fund required to be deposited to the future’s trading account to ensure the availability of sufficient margin when a future contract is subject to losses. To understand variation margin following terms need to be understood. Initial margin The initial margin is the amount required to be submitted …
What is Variation Margin? – Meaning, Example, Importance, and More Read More »
It’s an option to enter an interest rate and other types of swaps. The Swaption gives the buyer the right to enter a specified swap agreement on a specific date. However, the buyer of the Swaption has to pay for the options premium. An option premium is an income the seller earns for writing the …
What is Swaption? (Swap Option): Meaning, Features, Benefits, Types, and More Read More »
Derivative instruments The derivatives are instruments that do not have intrinsic value. On the contrary, the value of the derivatives is derived from one or more underlying. These underlying can be stocks, bonds, currencies, stock indices, commodities, or precious metals. The basic theme of derivatives is to mitigate the risk by hedging. The science is …
For bonds or loans, the maturity date is defined as the date when a final payment of the bond or loan is paid. This is also defined as the date when all of the principal plus interest is paid. There are a multitude of maturity-type bonds and a multitude of maturity dates. The government bonds, …
What Is the Maturity Date? What Does It Mean to Your Loans and Bonds? Read More »
An adjustable-rate mortgage is also called a variable rate or tracker mortgage. There are two main types of mortgages, one is fixed-rate mortgages, where you pay a fixed interest rate for the duration of the mortgage, and the second is variable rate adjustable mortgage where the interest rate you pay keeps changing when the underlying …
How Many Types of Adjustable-rate Mortgages? All You Need To Know Read More »
Government-backed loans are loans provided by the government for a particular organization or person with a sovereign guaranty by the government. The sovereign guaranty means that the government would pay back the loans if that particular organization or person is unable to pay back the loan. The organization can be a small business or a …
How Many Types of Government-backed Loans? (All You Need to Know) Read More »
Industrial revenue bonds, also known as IRB, are issued by a local county or state on behalf of a private-sector corporation to raise funds for building a factory, acquiring capital equipment, or just paying for running expenses. The industrial revenue bonds are also known as Industrial Development Bonds or IDB. The industrial revenue bonds are …
Industrial Revenue Bonds – Everything You Need to Know Read More »
