The Money exchange

Category: money , Asked by: T. E. From United States

A: If you need a forex web trading platform that offers the smallest leverage, you must totally explore "FX Universal". If you prefer the more safe way, the leverage in this forex web trading platform gets up to only 100:01:00. No commissions are demanded by this place, the service is astounding, the minimum deposit starts from the small amount of $250, and also the platform graphics are the most proficient.

Category: glossary , Asked by: P. Padilla from Schaan, Liechtenstein

A: a "bi-weekly mortgage " is A mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year. This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage. When a bi-weekly payment plan is set up, most mortgage servicing companies simply hold the first half of the monthly payment until the second half arrives and then make the full monthly payment. If a simple interest bi-weekly mortgage plan can be set up, each payment received is immediately applied toward to principal balance of the mortgage leading to additional interest savings. Converting an existing mortgage to a bi-weekly plan usually carries some fees. A self-disciplined borrower can gain the same benefits of a bi-weekly plan by making one additional mortgage payment each year, or by paying an extra amount each month equal to 1/12 of the scheduled monthly payment.

Category: glossary , Asked by: G. C. From United States

A: "quality spread differential " is In an interest rate swap, the difference between the interest rates of debt obligations offered by two parties of different creditworthiness that engage in the swap. A swap transaction is considered beneficial to both parties only when the QSD is positive. For example, suppose ABC Corp can borrow debt at a fixed rate of 10.75% or at a floating rate of LIBOR. And let's say that XYZ Corp. Can borrow debt at a fixed rate of 10% or at a floating rate of LIBOR -0.25%. The fixed rate differential would be 0.75% and the floating rate differential would be 0.25%. The QSD would be 0.5%. Since the QSD is positive, both companies would benefit from entering into a swap transaction.

Category: glossary , Asked by: Z. Gibson from France

A: a "front-end ratio " is A ratio that indicates what portion of an individual's income is used to make mortgage payments. It is calculated as an individual's monthly housing expenses divided by his or her monthly gross income and is expressed as a percentage. Monthly gross income is simply annual income divided by 12 (months). Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages. Calculated as: For example, if your annual income is $60,000, your monthly income is $5,000(60,000/12). By asking your lender what front-end ratio would be required in order for your mortgage to be approved, you can figure how much of that $5,000 you can allocate to your mortgage payments. If the required front-end ratio is 31%, you can allocate $1,550 (5,000 x 0.31). Thus, if your PITI is $1,550 or less, you would be approved. Typical monthly housing expenses include the mortgage principal, interest, taxes and insurance payments - collectively known as PITI.

Category: glossary , Asked by: Alexander F. From Canada

A: A loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower. The borrower could be a corporation, a large project, or a sovereignty (such as a government). The loan may involve fixed amounts, a credit line, or a combination of the two. Interest rates can be fixed for the term of the loan or floating based on a benchmark rate such as the London Interbank Offered Rate (LIBOR). Typically there is a lead bank or underwriter of the loan, known as the "arranger", "agent", or "lead lender". This lender may be putting up a proportionally bigger share of the loan, or perform duties like dispersing cash flows amongst the other syndicate members and administrative tasks. Also known as a "syndicated bank facility". The main goal of syndicated lending is to spread the risk of a borrower default across multiple lenders (such as banks) or institutional investors like pensions funds and hedge funds. Because syndicated loans tend to be much larger than standard bank loans, the risk of even one borrower defaulting could cripple a single lender. Syndicated loans are also used in the leveraged buyout community to fund large corporate takeovers with primarily debt funding. Syndicated loans can be made on a "best efforts" basis, which means that if enough investors can't be found, the amount the borrower receives will be lower than originally anticipated. These loans can also be split into dual tranches for banks (who fund standard revolvers or lines of credit) and institutional investors (who fund fixed-rate term loans).

Category: glossary , Asked by: Jaylan O. From United States

A: A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.

Category: glossary , Asked by: Q. Howell from Schaan, Liechtenstein

A: A fixed income trading strategy that looks for discrepancies in the yield curve on which an investor can capitalize by instituting a bond swap. Discrepancies come about when current yields on a particular class of bond (corporate, municipal, etc.) don't match up with the rest of the yield curve or its historical norms. An investor performing a matrix trade could be looking to profit purely as an arbitrageur (by waiting for the market to "correct" a yield spread discrepancy), or by trading up for free yield, for example by swapping debt with similar risks but different risk premiums. Yield curves can be thrown off historical patterns for any number of reasons, but most of those reasons will have a common source - uncertainty about the future of financial markets. Individual classes of bonds may also be inefficiently priced for a period of time, such as a high-profile corporate default that sends shock waves through corporate debt with similar ratings.

Category: glossary , Asked by: X. X. From United States

A: An economic measure of the difference between the actual output of an economy and the output it could achieve when it is most efficient, or at full capacity. There are two types of output gaps: positive and negative. A positive output gap occurs when actual output is more than the full-capacity output. Negative output gap occurs when actual output is less than full-capacity output. The measure compares the actual GDP (output) of an economy and the potential GDP (efficient output). When the economy is running an output gap, either positive or negative, it is thought to be running at an inefficient rate as the economy is either overworking or underworking its resources. Economic theory suggests that positive output gap will lead to inflation as production and labor costs rise.

Category: glossary , Asked by: A. Reynolds from Bergisch Gladbach, Germany

A: An SEC reporting form filed by institutional investment managers in accordance with the provisions of section 13(f) of the Securities and Exchange Act of 1934, which states that all institutional investment managers who are managing over $100 million on the last trading day of any month of the calendar year must disclose their holdings on a quarterly basis. The Form 13F is a result of the SEC's desire to introduce increased transparency and disclosure in the mutual fund and money management industries in the wake of the market crash of 1929. Although the SEC's goal is to provide access to the holdings of large institutions, it is still very difficult for individual investors to acquire this information.

Category: glossary , Asked by: K. E. From Durham, United States

A: the "accrued market discount " is The gain in the value of a discount bond expected from holding it for any duration until its maturity. As discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity. For example, let's say someone purchases a discount bond with a par value of $1000 for $700. By holding the bond, they can expect a maximum gain of $300. Any appreciation above the $700 paid is called the accrued market discount. This rise in price is different than that which occurs in regular coupon bonds as a result of lowering interest rates.