DERIVATIVES TIME BOMB
A possible situation where the financial markets plunge into chaos if the massive derivatives positions owned by hedge funds and the large banks were to move against those parties.
Institutional investors have increasingly used derivatives to either hedge their existing positions, or to speculate on given markets or commodities. The growing popularity of these instruments is both good and bad because although derivatives can be used to mitigate portfolio risk. Institutions that are highly leveraged can suffer huge losses if their positions move against them.
POPULAR TERMS
Specific-Shares Method
Specific-shares method is a personal financial accounting whose purpose is to cut down realized capital gains for multiple stock or mutual fund pur ...
Voting Trust Certificate
Voting Trust Certificate is a document issued by the limited-life trust of a corporation, which is created to limit the control of a corporation to ...
Sample Selection Bias
Sample Selection Bias is a type of bias resulting from the selection of non-random data meant for statistical analysis.
Combined Loan to Value Ratio - CLTV Ratio
Ratio determining the default risk of a potential homebuyer if he would purchase a home using multiple mortgages. In general, creditors are willing ...
Contagion
Possibility a significant economic changes in a country will spread to other nations. It pertains to the spread of either an economic boom or econo ...
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