Cyber*School

cp. nominal value

Value of a future or option which is calculated based on a theoretical pricing model (eg Black & amp; Scholes model) taking into account price determining factors.

abbr. Federal Deposit Insurance Corporation

see Federal Reserve System

The interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The Fed funds rate, as it is called, often points the direction of U.S. interest rates. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate.

USD interest rate swap, where the floating rate is linked to the Federal Funds effective rate see also: OIS

Federal bonds are issued by the state. They serve the state to borrow capital in the long term.

an independent agency that promotes public confidence in the US financial system by insuring deposits in US banks and thrift institutions

the basic task of the FOMC is to define the open market policy of the Federal Reserve System (FED), that means it sets the key interest rate for the USD. It is composed of seven members of the Board of Governors und five members of Federal Reserve Banks.

the central bank system of the United States The FED consits of 12 Federal Reserve Banks. The basic tasks are: price stability, high rate of employment, longterm equilibrium in the balance of payments and reasonable economic growth The most important instrument in monetary policy is the open market policy which is defined by the Federal Open Market Committee (FOMC)

(Federal Securities and Markets Authority). Public institution, which was established under the Securities Supervision Act of 1996 for the supervision of the securities market (stock exchange) and the financial services business. (since 1998). The tasks of the Federal Securities and Markets Authority include the elimination of illegal business practices, monitoring of disclosure requirements, the licensing of investment services companies and the exchange of international information and experience.

abbr. of Frankfurt Interbank Offered Rate,replaced by the EURIBOR 1.1.99

(FOK) This is an order form in which it is executed immediately and completely or not at all. If an execution is not possible, the fill-or-kill order is immediately deleted and not included in the order book.

Either the settlement in cash or units upon the exercise of options or the expiry.

Investigation of companies in respect of their economic situation, future success and financial solvency (liquidity). The financial analysis provides the basis for investment decisions.

see futures

any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity

The FMA Act came into force on 01.04.2002 and regulates the supervision of the Austrian financial market by the Financial Market Authority (FMA).

The FMA monitors the adequacy operated by the Vienna stock markets in Austria as an independent authority on the basis of the Financial Market Supervision Act (FMA Act). Their responsibilities among others are set out in the Stock Exchange Act and the Securities Supervision Act and have to focus on the national economic interest in a functioning capital market and in particular on the interests of investors. The tasks of the FMA are divided into banking supervision, insurance supervision, securities supervision and pension institutions supervision.

Plan that contains the current financial situation and investment objectives.

Financial Services Authority in the United Kingdom of Great Britain and Northern Ireland. www.fsa.gov.uk

The Financial Stability Institute (FSI), is one of the bodies hosted by the Bank of International Settlements (BIS) at its headquarters in Basel. Established in 1999 by the BIS and the Basel Committee on Banking Supervision, its primary role is to improve the co-ordination between national Bank Regulators through holding seminars and acting as a clearing house for information on regulatory practice.

A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets.

The holder receives predetermined interest at regular intervals by the issuer. (usually annual).

also straight bondbond with a fixed couponopposite: floating rate note

Exchange of fixed against variable interest rates.

A deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a month to a few years. When a term deposit is purchased, the lender (the customer) understands that the money can only be withdrawn after the term has ended or by giving a predetermined number of days notice. By having the money tied up you'll generally get a higher rate with a term deposit compared with a demand deposit.

Bond with a fixed coupon. Contrary floating rate note

A debt instrument such as a bond, debenture or gilt-edged bond that investors use to loan money to a company in exchange for interest payments. A fixed-interest security pays a specified rate of interest that does not change over the life of the instrument. The face value is returned when the security matures.

couponswap in which a fixed interest rate (coupon) is paid, and a variable interest rate (e.g. EURIBOR, LIBOR) is received

coupon swap in which a fixed interest rate (coupon) is received, and a variable interest rate (e.g. EURIBOR, LIBOR) is paid.

price- resp.rate-fixing, e.g. LIBOR, EURIBOR, goldfixing, foreign exchange fixing, etc.

yield curve with the same interest rate level for all periods

a US-style repo in which the purchaser redeems the cash in fixed installments.

abbr. Floating Rate Note

A bond with a variable coupon that is linked to an index (eg, 6-month EURIBOR).

a repo with a variable interest rate (e.g. EONIA)

A floor is an interest rate floor for a variable interest rate, and consists of a series of put options on a fixed reference interest rate (e.g. 6-months EURIBOR) with the same strike. A single option of this series is called floorlet. The purchaser of the cap receives a compensation from the seller, if the reference interest rate is fixed below the strike at the expiry date.

Classic stock exchange type in which the trade takes place physically in a trading room.

a single option out of a floorv. floor

Central optimization of treasury transactions

abbr. fill-or-kill

abbr. Federal Open Market Committee

another designation for FT-SE 100

bond issued by a foreign entity in one singular national market denominated in the currency of this countryopposite: domestic bond and Euro-bond

A bond which is listed in a foreign currency.

An outstandning loan that has been granted in a foreign currency and has to be paid back in that currency. Using foreign currency loans may decrease the interest expenses but involves foreign exchange risk.

The global foreign exchange market is by far the largest financial market. The exchange of one currency for another, or the conversion of one currency into another currency. Foreign exchange also refers to the global market where currencies are traded virtually around-the-clock. The term foreign exchange is usually abbreviated as "forex" and occasionally as "FX."

abbr. Foreign Exchange

Characteristic price curves that should enable to predict future price movements in the context of technical analysis. Among the most famous formations are flags, pennants and wedges, the head and shoulders pattern and the M & amp; W formation.

Generic term for instruments whose price is is derived from the price of other securities or financial products (the so-called underlying assets or underlyings). Examples of derivatives: futures, options and swaps.

v. SAFE

A forward contract is a fixed agreement between two parties to conduct a foreign exchange transaction at a fixed rate with a later date than the spot transaction day.

v. Cross Currency Swap

Interest rate fixed today on a loan to be made at some future date

v. FRA

(FSA) This variation of a forward rate agreement is used to hedge the spread between interest rates of similar maturity in different currencies.

a repo with a start date later than spot i.e. in the future

A customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging. Unlike standard futures contracts, a forward contract can be customized to any commodity, amount and delivery date. A forward contract settlement can occur on a cash or delivery basis. Two types: unconditional contracts (futures, forwards) and conditional financial instruments (options). Contrary spot transaction

a transaction in which two parties agree to exchange two currencies in the future and to do a reverse transaction with a value date later than the first exchangein fact is a FX-swap with a short leg with a value date later than spot, e.g. buy EUR/USD in 3 month and sell simultaneously EUR/USD in 6 month

One of two types of internal ratings-based approaches. It allows banks to calculate their regulatory capital requirement by using banks# internally generated estimate of the probability of default and, in some cases, the effective maturity (see also internal ratings-based approach, foundation internal ratings-based approach)

abbr. for Forward Rate AgreementThe agreement between two parties to pay the difference between the agreed interest rate and the interest rate at a certain point of time (reference rate). The FRA is an OTC-instrument and is used in the money market for the management of the interest risk

The amount due is the only cash-flow at an FRA. It is the difference between the agreed interest rate and the reference interest rate, based on the agreed term and the nominal value.

Determination of the reference interest rate, which is the basis for the calculation of the FRA-amount due.The fixing occurs normally two working days before the settlement (exception GBP: on the same day)As reference rate serves mainly LIBOR or EURIBOR.

A FRA is settled by the amount due. The settlement-date is at the beginning of the maturity of the FRA-period. Therefore a discounting is applicable at the calculation of the amount due.

FRA-strip indicates a series of short-term FRAs, with which a long-term FRA is produced. For example a 3/6 and a 6/9 FRA respond to a 3/9 FRA.

abbr. for Forward Rate Agreement British Bankers Association, master agreement for FRAs

(FIBOR) Was a reference rate on the money market for "Deutsche Mark"time deposit and was replaced on 01.01.1999 by the EURIBOR.

another designation for actual/360

e.g. annually, semi-annually, quarterly, etc.markets with annually payment of interest: Germany, France, Netherlands, Austria, Switzerland, Euro-bonds, etc.markets with semi-annually payment of interest: USA (only domestic), UK, Japan, Canada, Australia

Floating Rate Note, A bond with a variable coupon which is bound to an index e.g. 6-months EURIBOR

the contract of a futures (e.g. bund-futures) with the nearest settlement day

1. abbr. for Forward Spread Agreement2. abbr. for Financial Services Authority,the FSA is an independent financial market supervision in UK, www.fsa.org.uk

abbr. Financial Stability Board ;Part of the Bank for International Settlement (BIS) in Basel

see also Financial Stability Institute

(Footsie) The Financial Times Stock Exchange index includes the top 100 stocks traded on the LSE (London Stock Exchange). It is calculated by FTSE Group, which emerged from a joint venture of the London Stock Exchange with the Financial Times. The Footsie exists since 1984 and is calculated in real time.

The total assets of the investment fund. It consists of securities and other rights, bank credit balances and deposits, return requirements (income adjustment), but may also include derivativ financial market instruments (such as options, futures, swaps, and many others). These assets are reduced at most by borrowings or obligations under derivative financial instruments. The fund's assets is the exclusive property of the shareholders and the investment company only manages it. Therefore it can not be lost in a liquidation of the investment company or custodian bank.

The fund manager has the responsibility of managing the fund's assets, ie The money to invest as well as possible, taking into account the opportunities and the risks taken.

A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management).

Special funds, which are managed by an investment company. The investor(Buyer) has the opportunity to participate in the development of all the fund's assets.

v. FRA

the future value contains capital and interest and can be calculated from the present value by adding accrued interest

agreement to sell or purchase a financial instrument or commodity at a particular price on a stipulated date in the future,contrary to forward contracts futures are exchange traded

Agreement about a future purchase or sale of a particular amount of a commodity in which delivery and payment take place at a specified date and at a specified price.

On the futures market fulfillment of a transaction takes place at a future date. Price, quantity and date of fulfillment are already fixed with the execution of the transaction . Contrary cash market

a series of futures,such a kind a longer period can be producedexample: by using March, June and September 3-months LIBOR futures a 9-months period from March till December can be produced.

Funds which investin the futures or options markets. The choices are (in addition to financial futures) as forward contracts on equities, interest rates, indices and currencies as well as futures contracts on precious metals, agricultural goods and raw materials (collectively Commodities). Futures funds have a significantly higher risk than other securities funds due to the leverage effect of derivative products.

abbr.

v. SAFE