Cyber*School

v. Bankers Acceptance

the ex post comparison of the calculated risk and the effectively occured changes of the value of a portfolio, Back testing as well as stress testing methods are essential supplements to value at risk calculations such as variance/covariance method, monte carlo simulation and historical simulation

Backwardation is a market condition where spot rates exceed forward rates. The term is common in commodity markets and corresponds to the term discount in FX-markets. In the energy markets, the prevailing condition may reflect supply and demand. For example, if the crude oil market is at backwardation, it may indicate a lack of immediately available supply. Contango is the opposite.

Name for a longer lasting exchange phase, which is characterized by regular price losses. Derives from the French word baisser = drop,descend. Contrary bull market.

The current account balance is a sub-account of the balance of payments. It summarizes trade balance, services balance, balance of income and balance of the current transfers together. The current account balance shows how a country can fund its exports by imports. A current account deficit causes an increase in the foreign debt of an economy.

A statement that summarizes an economy’s transactions with the rest of the world for a specified time period. The balance of payments, also known as balance of international payments, encompasses all transactions between a country’s residents and its nonresidents involving goods, services and income; financial claims on and liabilities to the rest of the world; and transfers such as gifts. The balance of payments classifies these transactions in two accounts – the current account and the capital account.

Comparison of all the assets and liabilities parts of a company to a balance sheet date. Serves the purpose of recognizing income and as a balance sheet.

A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation.

A medium or long-term bond issued by banks.

The credit institutions are issuing such form of bonds to provide borrowers money.

Under the Basel II framework, this asset class covers exposures to banks and those securities firms that are subject to supervisory and regulatory arrangements comparable to those under the New Framework.Also included are public-sector entities that are treated like claims on banks under the standardised approach, and multilateral development banks that do not meet the criteria for a 0% risk weight under the standardised approach

an international organisation that fosters co-operation among central banks and other agencies in pursuit of monetary and financial stability

A short-term credit investment created by a nonfinancial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts to face value in the secondary market. These instruments have been a popular instrument in the money market. They are commonly used in international transactions.

abbr. (BWG) Banking act in german

The banking book covers all the business of the Bank that is not used for commercial transactions and serves the overall bank management.

Company groups that engage predominantly in banking activities

Insolvency of the debtor (eg issuers of securities)

The liquidation of assets when a firm cannot meet its financial obligations. This is not synonymous with default and a firm may default on a specific debt obligation without declaring bankruptcy.

The currency in an international portfolio in which profits and losses are calculated.

abbr. Basel Committee on Banking Supervision