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Glossary of financial terms - Letter B

  • B2B

    Tags:  market transactions typology

    See  


  • back-to-back swap

    Tags:  derivatives financial instruments

    A back-to-back swap is a swap that is used to offset an existing swap by cancelling out the obligations of the original swap.

     


  • back-to-back transaction

    Tags:  concept market transactions

    A back-to-back transaction consists of two legally separate but economically linked sale and purchase transactions which otherwise share the same trade details. They typically involve three counterparties of which one acts as an intermediary between the two others, being a buyer on one transaction and a seller on the other.

     


  • back months

    Tags:  derivatives terminology

    Term designating the tradable contract months of futures, or options on futures, which are furthest from expiration.

     


  • back office

    Tags:  activities and occupations finance (general)

    Term designating the support operation of a financial institution which handles all post-negotiation activities like confirmations, settlement, clearing, documentation, payments, reporting etc. It usually englobes several operational entities.

     


  • backtesting

    Tag:  financial analysis

    Term describing the process of probing a trading strategy with the use of historical data in order to establish its viability before risking actual money.

     


  • backwardation

    Tags:  concept financial markets

    The term backwardation describes a market situation where spot prices are higher than forward prices.

     


  • balance of payments (BOP)

    Tags:  economy metric

    A country's balance of payments is the record of all transactions its residents (individuals, companies and government) have made with residents of all other countries over a defined period of time.

     


  • balance of trade (BOT)

    Tags:  economy metric

    A country’s balance of trade is the difference between the value of all the goods and services it imports and the total value of the goods and services it exports, for a given period.

     


  • balance sheet

    Tags:  accounting finance (general)

    A balance sheet is a document which summarises the financial position of a company by listing its assets and liabilities with their respective values at a certain point in time.

     


  • BAN

    Tags:  bond markets financial instruments

    Country:   United States of America

    See  


  • bank

    Tags:  banking system organisations or institutions

    A bank is an institution which receives, lends, exchanges and safeguards money and, in some cases, pursues other financial activities.

     


  • Bank for International Settlements (BIS)

    Tags:  financial system supranational bodies

    The BIS is an international financial institution which serves as a bank for central banks, promotes international cooperation among monetary and supervisory authorities and provides research and statistics for the latter.

     


  • Bank of England (BoE)

    Tags:  banking system central banks organisations or institutions

    The Bank of England is the central bank of the United Kingdom.

     


  • barrier option

    Tags:  options typology

    An option which either dies (the option is said to knock out) or comes alive (the option is said to knock in) if the underlying reaches an agreed price or rate.

     


  • Basel Committee

    Tags:  organisations or institutions supervision and regulation

    See  


  • Basel Committee on Banking Supervision

    Tags:  organisations or institutions supervision and regulation

    The Basel Committee on Banking Supervision, generally only known as the Basel Committee, is a forum in which representatives from central banks and regulatory authorities of the member countries work out coordinated rules for banking supervision.

     


  • Basel II

    Tags:  financial system regulation

    Basel II refers to the second set of recommendations issued by the Basel Committee in 2004.

     


  • base prospectus

    Tags:  interest rate instruments security issuance

    The document published by the Issuer in relation to a Programme and made available to prospective investors. May also be called by another name, such as offering circular or information memorandum.

     


  • basis

    Tags:  financial instruments valuation and pricing

    Term designing the difference between the cash price of an instrument and the price of its respective future contract.

     


  • basis point

    Tags:  financial instruments valuation and pricing

    The unit by which interest rate margins or spreads are expressed. By convention, a basis point is worth one hundredth of one percent or 0.01%.

     


  • basis point value (BPV)

    Tags:  bonds pricing and analysis

    See  


  • basis risk

    Tags:  market transactions risk management

    Risk (1) due to the inability to create a perfect hedge using futures contracts because of their standardised nature or (2) inherent in a basis trade.

     


  • basis swap

    Tags:  financial instruments interest rate derivatives

    An interest rate swap in which both legs are calculated on a floating rate, but based on different indexes. In a basis swap, the two floating legs can also be in different currencies.

     


  • basis trade

    Tags:  market transactions strategies

    Trading strategy consisting in the simultaneous entry into both a cash position for a particular product and an equal and opposite futures position on the same underlying.

     


  • Basis Trading Facility (BTF)

    Tags:  financial markets quoting and negotiation systems

    Name of NYSE LIFFE's system which allows market participants to execute basis trades as a single transaction by simultaneously executing the cash and the future leg of the trade, thus reducing execution risk.

     


  • basket

    Tag:  financial instruments

    A group of securities which are bought, sold, used for valuation purposes or used in any other way as a single unit. The term also refers to some derivatives transactions where the underlying represents a group of securities.

     


  • basket default swap (BDS)

    Tags:  credit derivatives financial instruments

    A basket default swap is an insurance contract against default similar to a credit default swap, except that payments are indexed to a basket of entities, rather than to a single reference asset.

     


  • BB

    Tags:  banking system concept

    Country:   United States of America

    See  


  • BCBS

    Tags:  organisations or institutions supervision and regulation

    See  


  • BCP

    Tags:  concept risk management

    See  


  • BDS

    Tags:  credit derivatives financial instruments

    See  


  • bear call spread

    Tags:  market transactions strategies

    An option strategy consisting of the purchase of a call with a high strike price and the simultaneous sale of a call with a lower strike price in the expectation of falling prices.

     


  • bearer bond

    Tags:  bonds typology

    Bearer bonds do not have registered owners but rather entitle whoever holds them to collect interest and redemption payments.

     


  • bearer security

    Tags:  characteristics financial instruments

    Bearer securities do not have registered owners but rather entitle whoever holds them to collect interest, dividend, redemption and other payments.

     


  • bearish

    Tags:  concept financial markets

    When market prices tend to go lower, the market is said to be bearish.

     


  • bear market

    Tags:  concept financial markets

    A bear market is a market in which prices are declining.

     


  • bear put spread

    Tags:  market transactions strategies

    An option strategy consisting of the purchase of a put option with a high strike price and the simultaneous sale of a put option with a lower strike price in the expectation of falling prices.

     


  • below par

    Tags:  financial instruments market quotation

    Expression used for describing the quotation of a financial instrument for which the market price or valuation is higher than the instrument's nominal value.

     


  • beneficial owner

    Tag:  financial instruments

    The name (and sometimes the address) of the actual owner of the securities (as opposed to the broker or the custodian in whose name the securities are registered) that receives the benefits of ownership (such as income) and exercises ultimate control over the asset’s holding or disposal.

     


  • Bermudan option

    Tags:  options typology

    An option where the buyer has the right to exercise at a set and always discretely spaced number of times. This is intermediate between a European option - which allows exercise at expiry - and an American option which allows exercise at any time.

     


  • Bermudan swaption

    Tags:  financial instruments interest rate derivatives

    A swaption which can be exercised on several dates or over several defined periods.

     


  • best of two equity indices swap

    Tags:  equity derivatives financial instruments

    A type of equity swap which pays the higher return on two equity indices against a LIBOR rate.

     


  • beta

    Tags:  financial instruments valuation and pricing

    The beta of an asset or a portfolio of assets measures its volatility in comparison to that of the market - or a representative market indicator - as a whole.

     


  • BEY

    Tags:  bond markets pricing and analysis

    See  


  • BI

    Tags:  concept economy

    See  


  • BIC

    Tags:  banking system codes or standards

    See  


  • bid

    Tags:  financial instruments market quotation

    See  


  • bid price

    Tags:  financial instruments market quotation

    The price at which the quoting trader buys a financial product or instrument.

     


  • bill of materials (BOM)

    Tags:  concept economy

    A bill of materials is a comprehensive list of raw materials, parts, assemblies and other items required to create a product.

     


  • binary option

    Tags:  options typology

    A type of option which will either pay a fixed amount when it expires in the money, or nothing at all when expiring out of the money.

     


  • binomial option pricing model

    Tags:  options valuation and pricing

    A method of pricing options which involves building a binomial tree or price distribution, valuing the option at each node of the tree and discounting back to today.

     


  • BIS

    Tags:  financial system supranational bodies

    See  


  • bitcoin

    Tag:  means of payment

    Bitcoin is a digital currency that is exchanged in a decentralized network, without the involvement of a central bank or other administrative entity. Transactions take place peer-to-peer through the use of cryptography, and are recorded in a public distributed ledger called blockchain.

     


  • Black

    Tags:  options valuation and pricing

    The ‘Black’ option pricing model - named after Fischer Black - can be used to price options on forward rates, such as interest rate caps and floors.

     


  • Black and Scholes

    Tags:  options valuation and pricing

    Black & Scholes is the name of an option pricing model which underpins many other models.

     


  • black pool

    Tags:  financial markets quoting and negotiation systems

    See  


  • black swan

    Tags:  events financial markets

    Expression designating an unexpected event which has a major impact, sometimes even historical significance, and which is rationalized by hindsight as if it could have been expected.

     


  • blended equity index swap

    Tags:  equity derivatives financial instruments

    A Quanto Equity Index Swap in which there are different notional principal amounts on the two legs. The counterparty therefore receives a blend of the return on two equity indices.

     


  • block trade facility (BTF)

    Tags:  financial markets quoting or negotiation modes

    A block trading facility is a facility proposed by exchanges that allows traders to execute noncompetitive, bilateral transactions outside the open outcry or electronic markets.

     


  • Bobl

    Tag:  bonds

    See  


  • Bobl future

    Tags:  financial instruments interest rate derivatives

    See  


  • BOE

    Tags:  central banks organisations or institutions

    Country:   United Kingdom

    See  


  • BOM

    Tags:  concept economy

    See  


  • bond

    Tag:  bonds

    Debt security issued by a public of private entity. The majority of bonds are negotiable and can be bought or sold on a secondary market anytime between their issuance and maturity. They provide their bearers with interest, either periodically (coupon bonds) or at maturity (zero coupon bonds).

     


  • Bond Anticipation Note (BAN)

    Tags:  financial instruments interest rate instruments

    A bond anticipation note is a short-term interest-bearing security issued a governmental unit in advance of a future bond issue.

     


  • bond basis

    Tags:  interest rate instruments market conventions

    See  


  • bond equivalent yield (BEY)

    Tags:  bonds pricing and analysis

    The objective of calculating the bond equivalent yield (BEY), also known as the coupon equivalent yield, is to compute a yield measure that facilitates comparisons between the rate of return on discount securities such as T-bills and capital market debt instruments such as coupon-paying bonds.

     


  • bond future

    Tags:  financial instruments interest rate derivatives

    A bond future is a contract in which the buyer agrees to purchase pre-specified bonds from the seller at a set price and within a certain time window.

     


  • bond rating

    Tags:  security issuance valuation and pricing

    A judgement about the capacity of a bond issuer to fulfill its obligation to pay interest and repay principal when due.

     


  • bond swap

    Tags:  concept market transactions

    A bond swap is a technique whereby an investor chooses to sell a

    and simultaneously purchase another bond with the proceeds from the sale.

     


  • Bon du Trésor à intérêt annuel (BTAN)

    Tag:  bonds

    BTAN are French medium-term government notes issued with maturities between 2 and 5 years.

     


  • Bons du Trésor à taux fixe et à intérêts précomptés (BTF)

    Tag:  money market instruments

    BTF are Treasury bills issued by the French government bonds with maturities between and 12 and 51 weeks.

     


  • book value

    Tags:  accounting valuation and pricing

    In accounting, book value is the value of an asset or security as it shows in a company's books.

     


  • bootstrapping

    Tags:  financial techniques interest rate markets

    Method used to calculate present value factors or zero coupon rates from the cash yield curve.

     


  • BOP

    Tags:  concept economy

    See  


  • BOT

    Tags:  economy metric

    See  


  • bought deal

    Tags:  interest rate instruments security issuance

    A bond issuing method where the lead manager of the issue buys the bonds at a set price and then arranges for the sale of those bonds to investors.

     


  • BPV

    Tags:  bond markets pricing and analysis

    See  


  • break even

    Tags:  financial instruments valuation and pricing

    Refers to a price or rate at which the cost and the proceeds of a financial instrument or transaction are equal. When that price or rate is exceeded, the transaction starts to generate profit.

     


  • broker

    Tags:  financial organisations market participants

    An intermediary in the financial markets who executes trades for customers against the payment of a fee.

     


  • BTAN

    Tag:  bonds

    Country:   France

    See  


  • BTF

    Tags:  financial markets quoting or negotiation modes

    See  


  • BTF

    Tags:  financial markets quoting or negotiation modes

    See  


  • BTP future

    Tags:  financial instruments interest rate derivatives

    See  


  • bulge bracket

    Tags:  banking system concept

    Term designing the world's largest and most profitable globally operating investment banks.

     


  • bull call spread

    Tags:  market transactions strategies

    An option strategy consisting of the purchase of a call with a low strike price and the simultaneous sale of a call with a higher strike price in the expectation of rising prices.

     


  • bulldog bond

    Tags:  bonds terminology

    Name given to sterling bonds issued in the UK by foreign issuers.

     


  • bullet repayment

    Tags:  concept finance (general)

    Method of redemption where the principal on the financial product is entirely redeemed at maturity, as with most bonds.

     


  • bullish

    Tags:  concept financial markets

    When market prices tend to go up, the market is said to be bullish.

     


  • bull market

    Tags:  concept financial markets

    A bull market is a market in which prices are rising.

     


  • bull put spread

    Tags:  market transactions strategies

    The purchase of a put with a low strike price against the sale of a call with a higher strike price, in the expectancy of rising prices.

     


  • Bundesanleihe (Bund)

    Tag:  bonds

    Long term bonds issued by the German government.

     


  • Bundesobligation (Bobl)

    Tag:  bonds

    Medium term notes issued by the German government.

     


  • Bund future

    Tags:  financial instruments interest rate derivatives

    See  


  • business continuity plan (BCP)

    Tag:  risk management

    A business continuity plan is a written plan of action that defines the procedures and systems required to continue or restore the operation of an organisation in the event of a disruption.

     


  • business day convention

    Tags:  financial instruments market conventions

    The business day convention determines how to proceed when a date which is relevant for the payment or calculation of interest falls on a non business day.

     


  • Business Identifier Code (BIC)

    Tags:  banking system codes or standards

    An 8- or 11-character code assigned as an address to a bank or financial institution.

     


  • business intelligence (BI)

    Tag:  economy

    Business intelligence refers to all technologies, applications and practices for the collection, analysis, and presentation of business information.

     


  • butterfly spread

    Tags:  options strategies

    The butterfly spread is a non-directional option strategy designed to draw a limited but highly probable profit, if the future volatility of the underlying is below (long butterfly) or above (short butterfly) the implied volatility. Butterfly spreads have a low probability of loss.

     


  • Buxl future

    Tags:  financial instruments interest rate derivatives

    See  


  • buy and sell back (BSB)

    Tags:  market transactions strategies

    Agreement to exchange securities against cash now and to transfer the securities back at a specified date and price later.

     


  • BV

    Tags:  accounting valuation and pricing

    See  


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