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Federal Deposit
Insurance Corporation (FDIC) - The regulatory agency
responsible for administering bank depository insurance in the US.
Federal Reserve (Fed) - The Central Bank of the United States.
Fixed Exchange Rate - An official exchange rate set by monetary
authorities for one or more currencies. In practice, even fixed exchange rates
fluctuate between definite upper and lower bands, leading to intervention.
Fixed Interest - This type of transaction pays an agreed interest rate
that remains constant for the term of the deal. Fixed interests are many times
found in bonds, as well as, a fixed rate mortgage.
Flat (or Square) - To be neither long nor short is the same as to be flat
or square. One would have a flat book if he has no positions or if all the
positions cancel each other out.
Floating Rate Interest - As opposed to a fixed rate, the interest rate on
this type of deal will fluctuate with market rates or benchmark rates. One
example of a floating rate interest is a standard mortgage.
Foreign Exchange (or Forex or FX) - The simultaneous buying of one
currency and selling of another in an over-the-counter market. Most major FX is
quoted against the US Dollar.
Foreign Exchange Risk - See Currency Risk
Forward - A deal that will commence at an agreed date in the future.
Forward trades in FX are usually expressed as a margin above (premium) or below
(discount) the spot rate. To obtain the actual forward FX price, one adds the
margin to the spot rate. The rate will reflect what the FX rate has to be at the
forward date so that if funds were re-exchanged at that rate there would be no
profit or loss (i.e. a neutral trade). The rate is calculated from the relevant
deposit rates in the 2 underlying currencies and the spot FX rate. Unlike in the
futures market, forward trading can be customized according to the needs of the
two parties and involves more flexibility. Also, there is no centralized
exchange.
Forward Points - The pips added to or subtracted from the current
exchange rate to calculate a forward price.
Forward Rate Agreements (FRA`s) - FRA`s are transactions that allow one
to borrow/lend at a stated interest rate over a specific time period in the
future.
Front and Back Office - The front office usually comprises of the trading
room and other main business activities.
Fundamental Analysis - Thorough analysis of economic and political data
with the goal of determining future movements in a financial market.
Futures - A way of trading financial instruments, currencies or
commodities for a specific price on a specific date in the future. Unlike
options, futures give the obligation (not the option) to buy or sell instruments
at a later date. They can be used to both protect and to speculate against the
future value of the underlying product.
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