Cyber*School

One may distinguishe between 2 types of insiders: Primary & secondary insiders. Primary insiders are those who have access to inside information, because of either their profession or capital investment. Secondary insiders are persons who received or have searched inside information.

A non-public fact regarding the plans or condition of a publicly traded company that could provide a financial advantage when used to buy or sell shares of the company's stock. Insider information is typically gained by someone who is working within or close to a listed company. If a person uses insider information to place trades, he or she can be found guilty of insider trading. Insider trading is illegal when the material information has not been made public and has been traded on.

Institutional investors are referred to as financial intermediaries with high investment amounts. e.g. Banks, insurance companies, pension funds, investment companies and building societies.

The simultaneous purchase and sale of futures on different underlyings but mostly with same delivery months.

money market deal between banks

Money market transaction between two banks. In case of a given depot you have invested money and in case of a taken depot you have taken money.

Price for the loaning of capital.

The portion of the interest margin which is derived by juxtaposing reference interest rates from investments / refinancing. Under the market interest method, the difference between interest income (= the sum total of all investment transactions, valued at the respective reference interest rates) and interest expenditure (= the sum total of all refinancing transactions valued at the respective reference interest rates).

Result of interest income and interest expenditure

In the interest maturity gap assets and liabilities volume (on- and off-balance) are adjusted according to their respective interest adjustement and the corresponding reference rate in the maturity band.

another designation for interest calculation method

An interest payment that is made at the beginning of the Interest Period. Contrary interest payment in arrears

An interest payment that is made at the end of the Interest Period. Contrary interest payment in advance

see IRG

v. methods of interest calculation

the respective interest rate qualities agreed upon (e.g. fixed interest)

a type of market risk the risk, that a bank suffers losses from a unfavourable developement in interest rates

An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps often exchange a fixed payment for a floating payment that is linked to an interest rate (most often the LIBOR). In Interest rate swaps notionals are never exchanged but only used to calculate the interest payments. IRS may be or so called coupon swaps (fixed against variable) or bais swaps (variable against variable)

the method of interest rate calculation applied in certain market resp. at a certain instrument, e.g. act/360, 30/360, act/365 etc.

The portion of the intreest margin generated by the customer business. This is calculated by establishing the difference between external conditions (= customer's interest rate, effective interest rate) and the reference interest rate for the individual transaction concerned.