Cyber*School

On the stock market a name for strongly rising prices. Often referred to as stock market rally or rally.

interest rate swap in which the change of the variable interest rate is limited, in respect of the previous period

another designation for differetial swap

see exchange price

creditworthiness of a spedific security issue or a particular borrower as evaluated by a rating agency

Rating agencies rate the creditworthiness of an issuer and debt instruments using a standardized procedure on short- and long-term periods. The credit rating is expressed in combinations of letters, the highest one is AAA. The best-known rating agencies are Standard & Poor's, Moody's and Fitch.

An assessment of the risk of an obligor on the basis of a specified set of rating criteria. From this assessment, an estimate of the probability of default (PD) is derived.

Funds that do not invest in securities but primarily in real property (land and buildings).

provides information about changes in purchasing power of the capital employedIt is the nominal interest rate after deduction of the rate of inflation

An indication whose value is recalculated after each price event without delay.

If earnings are reinvested all the income earned is invested again. Therefore investors will not receive any distributions during the year.

see recapitalised securities

For reinvesting all the income earned by securities is invested again. The investor thus receives no dividends during the year. However, he is involved in the appreciation of the re-invested income of the security.

corresponds to a put option on a interest rate swap,The purchaser of the receiver swaption has got the right but not the obligation to sell an specified interest rate swap at the strike price on the expiry date, i.e. he concludes a swap in which he receives a fixed interest rate in exchange of a variable one (e.g. EURIBOR). A receiver swaption can be used in order to hedge against falling interest rates.v. swaption

The recovery rate is that proportion of the unsecured exposure, which is still repaid in a credit default.

Repayment of the outstanding capital. (borrowed)

The redemption price is that price at which a security is amortized at maturity.

(reduce) Analysts estimate for a stock that it will performe worse than the comparable (industry) index in the coming months. Short-term price increases will be used to sell or to reduce position.

risk-free interest rate for the same fixed-interest period for an alternative investment or refinancing on the interbank market.

The price which has been most recently determined in an auction or during continuous trading for a particular security

abbr. refinancing

Banks borrow to be able to lend. They can either borrow at the money market or the capital market. Cost of refinancing is determined by the uncertainty of the future interest rate development.

Name shares are registered in the name of a natural or legal person, which is the name of the shareholder. The name is recorded in the share register of the Company. Opposite: bearer shares

Remaining maturity of debt securities from a transaction date or another date until maturity.

The replacement risk is the risk of the bank that additional costs in replacing the same position in the market occur when a partner defaults.

abbr. for repurchase agreement,sale of securities with an simultaneous agreement, to repurchase them on a future date,A repo corresponds de facto to a security callateralized credit-taking.Basically there are two types US-style repo (classic repo) and sell and buy back.The PSA/ISMA Repurchase master agreement serves usually as the legal basis. opposite of repo: reverse repo

White flowers Fund (so-called reporting funds) is treated for tax purposes as a domestic fund. Distribution income be verified by a tax representative in Germany (bank or public accountants) annually and the distribution and income equivalent returns are reported on an annual basis. The proportion of interest income is reported daily.

Short for Special Government Representative for the capital market.

A form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day. For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction, (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement. Fundamental distinction is made between US-style repo (classic repo) and sell and buy back. The legal basis is the ISMA Purchase Master Agreement (ISMA Framework Agreement)

A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. Share repurchase is usually an indication that the company's management thinks the shares are undervalued. The company can buy shares directly from the market or offer its shareholder the option to tender their shares directly to the company at a fixed price.

see Securitization

(reserve account) account at the central bank on which a business partner maintains reserve balances.

A type of mortgage-backed debt obligation whose cash flows come from residential debt, such as mortgages, home-equity loans and subprime mortgages. A residential mortgage-backed security is comprised of a pool of mortgage loans created by banks and other financial institutions. The cash flows from each of the pooled mortgages is packaged by a special purpose entity into classes and tranches, which then issues securities and can be purchased by investors.

A chart point or range that caps an increase in the level of a stock or index over a period of time. An area of resistance or resistance level indicates that the stock or index is finding it difficult to break through it, and may head lower in the near term. The more times that the stock or index has tried unsuccessfully to break through the resistance level, the more formidable that area of resistance becomes. On an interesting note, resistance levels can often turn into support areas once they have been breached. Resistance and support levels are widely used by experienced traders to formulate trading strategies.

(ROD) Temporary validity determination for unrestricted limit orders: rest-of-day

These shares can only be transferred to other owners with the consent of the corporation.

german abbr. Result from ordinary activities

In order that loans may be assigned as retail exposure, the following criteria must be met: borrowers criterion (borrower is a physical person or SME); Product criterion (revolving credit and credit lines, private loan or lease receivable or loans and lines of credit to SMEs); low loan amount (less than 1 million €)

the retail price index is a measure for the average development of the prices of a basket of retail goods (incl. VAT)

The entirety of all measures after leaving the working life of saved assets or accrued benefits to cover the further livelihood without restrictions in living standards. The pension system consists of three pillars: statutory pension scheme, company pension schemes and private pension plans.

Operating income in relation to the sum of the fixed assets and current assets minus current liabilities

Earnings after taxes / equity x 100

Percentage value change of an investment in a certain period.

A metric that measures the yield in relation to that part of the equity that is necessary to cover banking risks and to cover the fixed assets.

(ROTA) A ratio that measures a company's earnings before interest and taxes (EBIT) divided by its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid. (EBIT/Total net assets) The greater a company's earnings in proportion to its assets , the more effectively that company is said to be using its assets. To calculate ROTA, you must obtain the net income figure from a company's income statement, and then add back interest and/or taxes that were paid during the year.

an information service company

Equivalent to the profit before tax and movements in reserves.

closing a position through an opposite deal

purchase of securities with a simultaneous agreement to re-sell them to the original seller on a future date,A reverse repo corresponds de facto a security callateralized credit lending. The PSA/ISMA Repurchase master agreement serves usually as the legal basis. opposite: repo

a repo which has got the same final maturity as the security (collateral)

cp. epsilon

Rights of shareholders to ask questions about to the company, the operating results and to the Executive Board at the General Meeting. In exceptional cases, the Board may refuse to provide information.

Right of shareholders to make proposals at the General Meeting.

It indicates the extent of the risks, a credit institution is able to take due to its equity base. It is used as a incurred risk buffer for emerging risks. Several scenarios striking expected risks: going concern, stress case or liquidation

Entering into banking risks such as interest rate risk, currency risk, liquidity risk and credit risk.

Risk levels are a measure for determining the risk of an investment

Imputed risk premium to cover the expected credit losses.

Provides opportunities and risks of an investment in graphical form.

Hedging

options strategy, where a out of the money call is purchased and a out of the money put is sold (or vice versa)smiles resp. skews are usually traded by means of risk reversals, the quotes usually refer to options with a delta of 25 %; e.g.:the quotation of a risk reversal is: calls are over 0,5meaning: the volatility of calls delta 25% (resp. puts delta 75%) is traded 0,5% higher than the volatility of puts with delta 25% (resp. calls delta 75%)

A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.

Interest income by investing in so-called risk-free assets. (Debt securities) eg german federal loans.

The theoretical rate of return attributed to an investment with zero risk. The risk-free rate represents the interest on an investor's money that he or she would expect from an absolutely risk-free investment over a specified period of time. In practice, however, the risk-free rate does not technically exist; even the safest investments carry a very small amount of risk. Thus, investors commonly use the interest rate on a three-month U.S. Treasury bill as a proxy for the risk-free rate because short-term government-issued securities have virtually zero risk of default.

abbr. Return on Capital Employed

abbr. Rest-of-Day

abbr. Return on equity

abbr. Return on Investment

medium- or long-term credit with an agreement, that the interest rate is adjusted to a stipulated reference rate (e.g. EURIBOR or LIBOR)

interest rate swap with an irregular nominal structure. The nominal structure is fixed at the beginning.

A calculation method for a reference rate that allows the controllability of the interest rate and margin results in transactions without direct repricing and maturity structure (baw). Adjustment is calculated with a time delay from the average of the past months or years.

abbr. Return On Risk Adjusted Capital

Designation for the opening and an associated closing transaction at a Future Exchange. The total transaction costs are often calculated on a so-called round-trip basis.

The RPI is an inflationary indicator that measures the change in the cost of a fixed basket of retail goods.

abbr. Risk Weighted Assets