1. The final version of a prospectus for a public offering of securities. This document is complete in all details concerning the offering and is referred to as a "statutory prospectus" or "offering circular."2. Because open-end mutual funds are continuously offering shares to the public, a fund prospectus is usually updated annually and made available to the public. Mutual fund prospectuses are all of the "final" variety. 1. With public offerings of securities, investors first receive what is called a preliminary prospectus, commonly called a "red herring" because of the pinkish color of the paper on which it is printed. Subsequently, the final prospectus is made available to investors who are considering a purchase of the security in question. A key difference between a final prospectus and a preliminary prospectus is that the final prospectus contains the security's price.
An option whose payoff depends on the average price of the underlying asset over a certain period of time as opposed to at maturity. Also known as an average option. This type of option contract is attractive because it tends to cost less than regular American options. An Asian option can protect an investor from the volatility risk that comes with the market. Asian Option An option whose payoff depends on the average price of the underlying asset over a certain period of time as opposed to at maturity. Also known as an average option. This type of option contract is attractive because it tends to cost less than regular American options. An Asian option can protect an investor from the volatility risk that comes with the market.
A type of foreign exchange loan agreement that was a precursor to currency swaps. A parallel loan involves two parent companies taking loans from their respective national financial institutions and then lending the resulting funds to the other company's subsidiary. |||For example, ABC, a Canadian company, would borrow Canadian dollars from a Canadian bank and XYZ, a French company, would borrow euros from a French bank. Then ABC would lend the Canadian funds to XYZ's Canadian subsidiary and XYZ would lend the euros to ABC's French subsidiary.The first parallel loans were implemented in the 1970s in the United Kingdom in order to bypass taxes that were imposed to make foreign investments more expensive.
A fund that conducts virtually all of its investing through another fund (called the master fund). This is similar to a fund-of-funds arrangement, except that the master fund manager is responsible for managing the underlying investments. Often, an onshore feeder fund will invest in an offshore master fund. This is done so that the foreign master fund can gain a tax advantage for the domestic investors.
A hedge position taken in anticipation of a future buy or sell transaction. An anticipatory hedge is used when an investor intends on entering the market and wants to reduce his or her risk by taking a long or short position in the target security. This type of hedge typically involves taking a long position, but can also involve short positions. Anticipatory hedges are not only used by investors. They are also a tool that can be used by businesses, such as farmers. For example, a farmer exports wheat from the United States to England. He will be paid in dollars once the goods reach the final destination, but the shipping time may take several weeks. The farmer is worried that the dollar will lose value over that time period when compared to the pound, so he takes a short position on the dollar so that he can hedge the anticipated decline. This is an anticipatory hedge because the farmer is taking a hedging strategy on a good, in this case the dollar, that he does not have yet. Anticipatory Hedge A hedge position taken in anticipation of a future buy or sell transaction. An anticipatory hedge is used when an investor intends on entering the market and wants to reduce his or her risk by taking a long or short position in the target security. This type of hedge typically involves taking a long position, but can also involve short positions. Anticipatory hedges are not only used by investors. They are also a tool that can be used by businesses, such as farmers. For example, a farmer exports wheat from the United States to England. He will be paid in dollars once the goods reach the final destination, but the shipping time may take several weeks. The farmer is worried that the dollar will lose value over that time period when compared to the pound, so he takes a short position on the dollar so that he can hedge the anticipated decline. This is an anticipatory hedge because the farmer is taking a hedging strategy on a good, in this case the dollar, that he does not have yet.
The name given to the group of banks contributing to the EURIBOR. This group is made up of the largest participants within the Euro money market. |||Panel bank institutions transact the largest volumes within the Euro market and provide stability and liquidity. Furthermore, these banks are located both inside and outside of Europe, and aren't always associated with regions recognizing the EU.
A group of mutual funds offered by one investment or fund company. Generally, the constituent funds cover a wide range of fund categories and investment objectives.Also referred to as a "mutual fund family" or simply a "fund family". Most fund companies offer a selection of mutual funds for investors to choose from. A large fund family offers investors a number of conveniences, such as "one-stop" shopping for their fund investing activities, the consolidation fund investments in one monthly statement, and the opportunity to make money transfers and undertake fund exchanges within the family easily and, usually, at little or no cost. Examples of large, well-known fund families are American, Fidelity, T. Rowe Price and Vanguard.
The most common of three official methods established by the International Swaps and Derivatives Association for calculating termination payments on a prematurely ended swap. The agreement value method is based on the terms available for a replacement swap because the counterparty that did not cause the early termination may need to enter into a replacement swap. Replacement swaps are used to calculate termination payments because changes in market conditions since the initial (now-terminated) swap were entered will mean that the terms of that swap are no longer available. The replacement swap will likely have different terms and different interest rates. The indemnification method and the formula method are alternatives to the agreement value method, but these are not used extensively. A termination event such as an illegality, tax event, tax event upon merger or credit event will cause a swap agreement to be terminated early, as will an event of default such as bankruptcy or failure to pay. If a swap is terminated early, both parties will cease to make the agreed-upon payments, and the counterparty who caused the early termination may be required to pay damages to the other counterparty. Agreement Value Method The most common of three official methods established by the International Swaps and Derivatives Association for calculating termination payments on a prematurely ended swap. The agreement value method is based on the terms available for a replacement swap because the counterparty that did not cause the early termination may need to enter into a replacement swap. Replacement swaps are used to calculate termination payments because changes in market conditions since the initial (now-terminated) swap were entered will mean that the terms of that swap are no longer available. The replacement swap will likely have different terms and different interest rates. The indemnification method and the formula method are alternatives to the agreement value method, but these are not used extensively. A termination event such as an illegality, tax event, tax event upon merger or credit event will cause a swap agreement to be terminated early, as will an event of default such as bankruptcy or failure to pay. If a swap is terminated early, both parties will cease to make the agreed-upon payments, and the counterparty who caused the early termination may be required to pay damages to the other counterparty.
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