abu yahya's definitions
(FINANCE) market price of a traded stock, commodity, currency, or bond at a specific point in time. For example, right now it's 5 April 2010 08:10 (GMT), and the spot price of WTI crude is $85.56/bbl. Spot price is the price at a specified time on a specific market.
by Abu Yahya April 5, 2010
Get the spot price mug.the sum of the capital account balance and the current account balance; put another way, the net change in financial reserves of a country, whether in the form of income (current account) or foreign investments (capital account)
For example, in all years since 1980, the USA has run a large-to-huge current account deficit, but in most years it has run a capital account surplus that is almost as big as the current account deficit. As a result, the USA has run a medium-to-large balance of payments deficit over this period.
A commonly-overlooked byproduct of BoP is that it determines whether or not a currency can be used as an international reserve currency. Despite repeated efforts by the governments of the EU and Japan to get their currencies established as such, they have failed to dent the US dollar's global primacy as the money for international transactions. This is because EU member states and Japan (as well as other major economies) run very large surpluses in their BoP. Japan, in particular, imports extremely little, and retains huge reserves rather than invest all of its net export earnings overseas. As a consequence, overseas holdings of euros or yen are much to small to serve as an alternative to the US dollar.
For example, in all years since 1980, the USA has run a large-to-huge current account deficit, but in most years it has run a capital account surplus that is almost as big as the current account deficit. As a result, the USA has run a medium-to-large balance of payments deficit over this period.
A commonly-overlooked byproduct of BoP is that it determines whether or not a currency can be used as an international reserve currency. Despite repeated efforts by the governments of the EU and Japan to get their currencies established as such, they have failed to dent the US dollar's global primacy as the money for international transactions. This is because EU member states and Japan (as well as other major economies) run very large surpluses in their BoP. Japan, in particular, imports extremely little, and retains huge reserves rather than invest all of its net export earnings overseas. As a consequence, overseas holdings of euros or yen are much to small to serve as an alternative to the US dollar.
Since the oil embargo of the 1970's, the US has run a balance of payments deficit because its trade deficit was enormous; prior to the embargo, the US BoP deficit was large because the US exported such an enormous amount of finance capital. As a consequence, the balance of payments deficit has persisted since the end of the Korean War (1953).
by Abu Yahya February 14, 2009
Get the balance of payments mug.(FINANCE) when a corporation "goes public"; the first sale of stock by a corporation. All sales of stock or bonds on the stock market require the services of an underwriter, or investment bank. Outside of the USA and China, it is common for regular banks to offer underwriting for corporations.
Incorporation is a legal status that allows (but by no means requires) a firm to issue stock. Moreover, once a corporation lists stock, it does not necessarily do so on a major exchange. Some corporations areclosely held, which means they have a small number of shareholders who are mostly affiliated with management; other corporations are "private," which means they have no stock issues at all, and control/shares of profits are determined contractually.
Some corporations have issues of stock, and that stock is traded, but it is not listed. Instead, it is traded on the "pink pages." Such companies are usually in a bad way, but not necessarily.
An IPO is the first issue of stock by a corporation THAT DOESN'T ALREADY have a listed stock. If a company is "taken private" (i.e., bought out by a PE fund and de-listed) then it can have another IPO (or "sponsored IPO"). Most likely, however, if a listed company will need to raise money on the stock market, it will have a "follow-on offering."
Incorporation is a legal status that allows (but by no means requires) a firm to issue stock. Moreover, once a corporation lists stock, it does not necessarily do so on a major exchange. Some corporations areclosely held, which means they have a small number of shareholders who are mostly affiliated with management; other corporations are "private," which means they have no stock issues at all, and control/shares of profits are determined contractually.
Some corporations have issues of stock, and that stock is traded, but it is not listed. Instead, it is traded on the "pink pages." Such companies are usually in a bad way, but not necessarily.
An IPO is the first issue of stock by a corporation THAT DOESN'T ALREADY have a listed stock. If a company is "taken private" (i.e., bought out by a PE fund and de-listed) then it can have another IPO (or "sponsored IPO"). Most likely, however, if a listed company will need to raise money on the stock market, it will have a "follow-on offering."
A fantasy of many entrepreneurs is "going public" with a big initial public offering, and retiring to a beachfront mansion.
by Abu Yahya September 2, 2010
Get the Initial Public Offering mug.(ECONOMICS) the lowest interest rate available to non-financial borrowers.
Banks can borrow money from the Federal Reserve System or each other at the lower federal funds rate--and they borrow money from depositors at lower rates still.
Banks can borrow money from the Federal Reserve System or each other at the lower federal funds rate--and they borrow money from depositors at lower rates still.
The most widely-quoted estimate of the prime rate is that published by the Wall Street Journal (from a survey of the 30 largest banks).
by Abu Yahya September 6, 2010
Get the prime rate mug.(EU GOVERNMENT) agency of the European Union that publishes harmonized statistics for the 27 member states of the EU. The EU does not collect the statistics, but reviews and edits statistics collected by its member states so that the data is comparable for all of the countries in it.
BILL: I'm blogging about the economy of Europe, but I don't know what the economic indicators are. You know, the unemployment rate, the inflation rate, hours worked, and so on.
ANNA: Go to the Eurostat web page. It's really awesome!
ANNA: Go to the Eurostat web page. It's really awesome!
by Abu Yahya July 15, 2010
Get the Eurostat mug.(ECONOMICS) An emergency in which a financial or government institution cannot meet its current obligations in an acceptable form of payment. Different from insolvency, which is where that same institution cannot be realistically expected to EVER meet its obligations.
A good example of the difference is a run on a bank, especially in the days before deposit insurance. A perfectly honest, well-run bank could have all of its books in order, and be paying its depositors in legal tender, when suddenly a panic strikes and everyone wants their deposits all at once. This is necessarily impossible, and forces the bank's officers to default on their debts.
Often, the bank could resume operation later when it was established that it held performing assets greater than deposits. More recently, liquidity crises have been a problem suffered by countries facing capital flight
A good example of the difference is a run on a bank, especially in the days before deposit insurance. A perfectly honest, well-run bank could have all of its books in order, and be paying its depositors in legal tender, when suddenly a panic strikes and everyone wants their deposits all at once. This is necessarily impossible, and forces the bank's officers to default on their debts.
Often, the bank could resume operation later when it was established that it held performing assets greater than deposits. More recently, liquidity crises have been a problem suffered by countries facing capital flight
In 1997, several countries in East Asia were stricken with a liquidity crisis. In many cases, such as Malaysia, the panicked response had nothing whatever to do with fundamentals; it was sheer herd mentality.
by Abu Yahya May 5, 2010
Get the liquidity crisis mug.(FINANCE) a financial instrument whose value is tied to something else; for example,
* a futures contract (future)
* an option
* a swap
In each of these examples, the value of the derivative is related in some way to the price of something else. When the market price of (say) an ounce of gold goes from $1000/oz to $1050/oz, the return to the owner of 1 oz. of actual gold is 5%. But for the owner of a call option or a future, the return is much, much greater than that.
A derivative can be used to multiply risk AND potential profits to speculators; but it can be used for the counterparty to minimize risk by locking in prices, or by hedging against risk.
* a futures contract (future)
* an option
* a swap
In each of these examples, the value of the derivative is related in some way to the price of something else. When the market price of (say) an ounce of gold goes from $1000/oz to $1050/oz, the return to the owner of 1 oz. of actual gold is 5%. But for the owner of a call option or a future, the return is much, much greater than that.
A derivative can be used to multiply risk AND potential profits to speculators; but it can be used for the counterparty to minimize risk by locking in prices, or by hedging against risk.
by Abu Yahya April 5, 2010
Get the financial derivative mug.