Volatility term structure

Similar financial terms

Volatility
A measure of the unceratinty or risk in the future price of an asset. Typically volatility is measured by the standard deviation or variance of returns on the asset. Also, volatility is a variable that appears in option pricing formulas. In the option pricing formula, it denotes the volatility of the underlying asset return from now to the expiration of the option.

Volatility Matrix
A table showing the variation of implied volatilities with strike price and time to maturity.

Volatility swap
A volatility swap is a financial instrument where the realized volatility during an accrual period is exchanged for a fixed volatility. Both percentage volatilities are applied to a notional principal.

Volatility risk
The risk in the value of options portfolios due to the unpredictable changes in the volatility of the underlying asset.

Reward-to-volatility ratio
Ratio of excess return to portfolio standard deviation.

Volatility Quote Trading
Refers to the quoting of bids and offers on option contracts in terms of their implied volatilities rather than as prices.

Term to maturity
The term to maturity of a bond, commonly referred to as maturity or term, is the number of years over which the issuer has promised to meet the conditions of the obligation set out in the bond indenture. The maturity of a bond refers to the date that the debt will cease to exist, at which time the issuer will redeem the bond by paying the principal (or face value).

Short-term bonds
Bonds with a maturity of between one and five years.

Medium-term or intermediate-term bonds
Bonds with a maturity of between five and twelve years.

Long-term bonds
Bonds with a maturity of more than 12 years.

Short Term Gain
The profit realized from the sale of securities or other capital assets possessed for twelve months or less.

Terminal value
The value at maturity.

Term structure of interest rates
The relationship between interest rates and their maturities.

Current portion of long-term dept
Those liabilities that are payable within the next 12 months, including accounts and taxes payable, and the current portion (12 months' payments) of notes payable and current liabilities.

Terms of trade
The weighted average of a nation's export prices relative to its import prices.

Terms of sale
Conditions on which a firm proposes to sell its goods services for cash or credit.

Term trust
A closed-end fund that has a fixed termination or maturity date.

Term premiums
Excess of the yields to maturity on long-term bonds over those of short-term bonds.

Term repo
A repurchase agreement with a term of more than one day.

Term insurance
Provides a death benefit only, no build-up of cash value.

Term loan
A bank loan, typically with a floating interest rate, for a specified amount that matures in between one and ten years and requires a specified repayment schedule.

Term bonds
Often referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is payable at maturity.

Term life insurance
A contract that provides a death benefit but no cash build-up or investment component. The premium remains constant only for a specified term of years, and the policy is usually renewable at the end of each term.

Term Fed Funds
Federal funds sold for a period of time longer than overnight.

Short-term tax exempts
Short-term securities issued by states, municipalities, local housing agencies, and urban renewal agencies.

Short-term solvency ratios
Ratios used to judge the adequacy of liquid assets for meeting short-term obligations as they come due, including (a) the current ratio, (b) the acid-test ratio, (c) the inventory turnover ratio, and (d) the accounts receivable turnover ratio.

Short-term investment services
Services that assist firms in making short-term investments.

Short-term financial plan
A financial plan that covers the coming fiscal year.

Other long term liabilities
Value of leases, future employee benefits, deferred taxes and other obligations not requiring interest payments that must be paid over a period of more than 1 year.

Medium-term note (MTN)
A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from the following maturity bands: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc., up to 30 years.

Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.

Long-term liabilities
Amount owed for leases, bond repayment and other items due after 1 year.

Long-term financial plan
Financial plan covering two or more years of future operations.

Long-term debt ratio
The ratio of long-term debt to total capitalization.

Long-term debt/capitalization
Indicator of financial leverage. Shows long-term debt as a proportion of the capital available. Determined by dividing long-term debt by the sum of long-term debt, preferred stock and common stockholder equity.

Long-term debt
An obligation having a maturity of more than one year from the date it was issued. Also called funded debt.

Long-term assets
Value of property, equipment and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company, usually on a "cost" basis and thus does not necessarily reflect the market value of the assets.

Long-term
In accounting information, one year or greater.

Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market's expectations of future interest rates because they embody a liquidity premium.

Terms Sheet
This is a document outlining the investment terms of a particular investment opportunity. It defines the terms and conditions of an investment, usually as dictated by an investor. It is the negotiating document that the parties must jointly agree to before a definitive investment agreement can be drafted.

Coefficient of determination
A measure of the goodness of fit of the relationship between the dependent and independent variables in a regression analysis; for instance, the percentage of variation in the return of an asset explained by the market portfolio return.

Financial intermediaries
Institutions which channel funds from people and institutions wishing to lend to those wishing to borrow.

Terminal Elevator
An elevator located at a point of greatest accumulation in the movement of agricultural products which stores the commodity or moves it to processors.

Terminal Market
Usually synonymous with commodity exchange or futures market, specifically in the United Kingdom.

Structured settlement
An agreement in settlement of a lawsuit involving specific payments made over a period of time. Property and casualty insurance companies often buy life insurance products to pay the costs of such settlements.

Structured portfolio strategy
A strategy in which a portfolio is designed to achieve the performance of some predetermined liabilities that must be paid out in the future.

Structured debt
Debt that has been customized for the buyer, often by incorporating unusual options.

Structured arbitrage transaction
A self-funding, self-hedged series of transactions that usually utilize mortgage securities as the primary assets.

Static theory of capital structure
Theory that the firm's capital structure is determined by a trade-off of the value of tax shields against the costs of bankruptcy.

Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure choices on a firm's credit statistics and reported financial results, especially to determine whether the firm will be able to use projected tax shield benefits fully.

Pie model of capital structure
A model of the debt/equity ratio of the firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets.

Personal tax view (of capital structure)
The argument that the difference in personal tax rates between income from debt and income from equity eliminates the disadvantage from the double taxation (corporate and personal) of income from equity.

Perfect market view (of capital structure)
Analysis of a firm's capital structure decision, which shows the irrelevance of capital structure in a perfect capital market.

Pecking-order view (of capital structure)
The argument that external financing transaction costs, especially those associated with the problem of adverse selection, create a dynamic environment in which firms have a preference, or pecking-order of preferred sources of financing, when all else is equal. Internally generated funds are the most preferred, new debt is next, debt-equity hybrids are next, and new equity is the least preferred source.

Capital structure
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities.

Flat Organisational Structure
An organisation where there is less distance between the higher and lower levels within the hierarchy. This involves a shorter chain of command and usually, a wider span of control.