GTC (Good-till-Cancelled)
Refers to an order given by an investor to a dealer to buy or sell a security at a fixed price that is considered “good” until the investor cancels it.
Hedge/Hedging
Strategy to reduce the risk of adverse price movements on one's portfolio and to protect against the volatility of the market. Hedging typically involves selling the good forward or taking a position in a related security. Hedging becomes more prevalent with increased uncertainty about current market conditions.
High/Low
Refers to the daily traded high and low price.
I
Inflation
Refers to the increase in prices (price level) and wages over time that decrease purchasing power. It is calculated from changes in the price index, usually a consumer price index or a GDP deflator.
Initial Margin
The percentage of the price of a security that is required for the initial deposit to enter into a position. The Federal Reserve Board requires a minimum of 50% initial margin. For futures contracts, the market determines the initial margin.
Interbank Rate
The rate at which the major banks (Deutsche, Citibank, Bank of Tokyo) trade in foreign exchange.
Interest Parity
Theory that says that the difference in interest rates across countries should be equal to the difference between the forward and spot rate.
Interest-Rate Swaps
The process of changing the form of debts held by banks or companies, in which they trade debts/loans fixed rates for floating rates (or vice versa) in another country.
Interest-Rate Swap Points
The interest rate can be determined through the difference in the bid and offer price of an exchange rate. If you are looking at the EUR/USD exchange rate and the offer price is higher than the bid price, than Europe's interest rates are higher than US interest rates.
ISDA (International Swaps and Derivatives Association)
Organization defining the terms and conditions for trade in derivatives.
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