Cyber*School

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.