Key Financial Market Concepts The 100 terms every finance professional needs to know

by Steiner, Bob

• ISBN13: 9780273750123
• ISBN10: 0273750127
• Edition: 2nd
• Format: Paperback
• Copyright: 2011-11-03
• Publisher: Ft Pr

Summary

The complete, up-to-date finance reference for every practitioner and student: complete, easy-to-understand explanations of 100 key terms. Defines each key term and instrument, explains the underlying concepts associated with it, shows how it works, and discusses when and how best to use it. Extensively updated, with new coverage of the efficient market hypothesis, portfolio theory, CDOs, and key elements of probability theory. By one of the world's leading finance instructors, and part of FT's market-leading Key series. Everyone who wants to succeed in finance needs a thorough understanding of the profession's core formulae and concepts. Key Financial Market Concepts identifies the 100 most important terms in modern corporate finance, thoroughly defines each of them, and details the essential concepts associated with each. Readers will learn how key financial instruments and techniques work, and when and how to use them. Highly-respected financial trainer Bob Steiner has fully updated this book For The latest trends and innovations in corporate finance. Now part of FT's popular Key series, this edition contains a new introduction, plus coverage of many new topics, including the efficient markets hypothesis, portfolio theory, CDOs, and key elements of probability theory.

Author Biography

Bob Steiner is the founder/managing director of Markets International, an independent training company. A former treasury officer and financial consultant he’s also the author of Mastering Financial Calculations, now in its second edition.

Table of Contents

About the author	p. xii
Using the book	p. xiii
Time Value of Money	p. 1
Simple Interest and Compound Interest	p. 3
Equivalent Rate, Effective Rate and Continuously Compounded Rate	p. 6
Future Value (FV), Present Value (PV), Rate of Discount and Discount Factor	p. 10
Net Present Value (NPV), and Internal Rate of Return (IRR)	p. 14
Money-weighted and Time-weighted Rates of Return	p. 17
Annuity	p. 20
The Money Markets	p. 25
Certificate of Deposit (CD), Commercial Paper (CP), Treasury Bill, True Yield and Discount Rate	p. 27
Values Dates, Interpolation and Extrapolation	p. 33
Zero-coupon Yield and Yield Curve	p. 37
Zero-coupon Yield, the Spot Yield Curve and Bootstrapping	p. 39
The Par Yield Curve	p. 45
The Forward-forward Yield Curve	p. 48
Forward-forwards, FRAs and Futures	p. 53
Forward-forward Interest Rate	p. 55 Forward R
STIR Futures Contract and Margin	p. 63 Basis Risk
Spread, Butterfly Spread and Condor	p. 72
Strip	p. 77
The Bond and Repo Markets	p. 81
Accrued interest, Clean Price and Dirty Price	p. 83
Money Market Basis and Bond Basis	p. 88
Yield to Maturity (YTM)	p. 92
Current Yield and Simple Yield to Maturity	p. 95
Zero-coupon Security and Strip	p. 98
Asset-backed Securities (ABS), Mortgage-backed Securities (MBS), Collateralised Debt Obligations (CDO) and Covered Bonds	p. 101
Bond Futures, Conversion Factor and CheapesMo-deliver (CTD)	p. 104
Cash-and-carry Arbitrage and implied Repo Rate	p. 110
Duration, Modified Duration, Price Value of a Basis Point (PVB),DV01 and Convexity	p. 115
Hedge Ratio	p. 122 Repo and
Haircut and Margin	p. 131 Buy/sell
Securities Lending/Borrowing	p. 139
The Swaps Market	p. 143
Interest Rate Swap (IRS)	p. 145
Asset Swap and Liability Swap	p. 149
Overnight Index Swap (OIS)	p. 157
Currency Swap	p. 161
Foreign Exchange	p. 167
Forward Outright and Forward Swap	p. 169
Cross-rate	p. 178
Short Dates	p. 183
Forward-forward Exchange Rate	p. 186
Non-deliverable Forward (NDF)	p. 188
Options	p. 191
Calls and Puts	p. 193
The Black and Scholes Pricing Mode!	p. 198
Historic Volatility and Implied Volatility	p. 203
Binomial Pricing Model	p. 206
The Put/Call Parity	p. 210
Cap, Floor, Collar and Zero-cost Option	p. 213
Break Forward, Range Forward and Participation Forward	p. 217
Option Trading Strategies: Straddle, Strangle, Spread, Butterfly, Condor, Ratio Spread and Risk Reversal	p. 223
Barrier Options: Knock-out Option and Knock-in Option	p. 233
Credit Derivatives, CDS, Synthetic CDO and First-to-default Baskets	p. 236
The 'Greeks'; Delta, Gamma, Vega, Theta and Rho	p. 243
Statistics	p. 251
Mean, Median and Mode	p. 253
Variance and Standard Deviation	p. 255
Correlation and Covariance	p. 259
Probability Density and the Normal Probability Function	p. 262
Risk Management and Investment Management	p. 269
Value at Risk (VaR)	p. 271
The Capital Adequacy Ratio	p. 276
Efficient Markets Hypothesis	p. 280
Appendices	p. 283
Glossary	p. 283
A Summary of. Day/Year Conventions for Money Markets and. Government Bond Markets	p. 303
Index	p. 305
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