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Financial terms in "Banking"

1. non-interest income

2. visible

3. petroleum industry

4. go into business

5. negotiable certificate of deposit

6. debt collection agency

7. governor

8. redistribution of risk

9. Member States

10. lowering

11. fiduciary deposit

12. down time

13. Fedwire

14. economic Pearl Harbor

15. position of trust

16. prospective P/E ratio

17. permanent

18. trading loss

19. pathfinder prospectus

20. second quarter

21. plough back

22. deposit in transit

23. inclusive

24. unissued capital

25. call-back pay

26. express

27. automated customer account transfer service (ACATS)

28. prepaid reply card

29. bank manager

30. final demand

31. hire and fire

32. sterling index

33. Learning and Skills Council

34. imputation system

35. Signature guarantee

36. high-risk investment

37. economy size

38. soar

39. ATS

40. cumulative preference share

41. deposit note

42. record-breaking

43. FTSE All-Small Index

44. debit ticket

45. domestic production

46. overcharge

47. hectic

48. Investors in Industry

49. custom-built

50. niche bank

51. compliance examination

52. inconvertible currency

53. document image processing

54. saleswoman

55. eliminate

56. associated company

57. service department

58. arrive at

59. taker

60. new issues department

61. graduate entry

62. swap arrangement

63. group health insurance

64. City

65. second-class mail

66. actual

67. complete

68. certified accountant

69. loyalty bonus

70. deflationary

71. Certified Consumer Debt Specialist (CCDS)

72. fixer-upper

73. income tax form

74. house telephone

75. jointly

76. droplock bond

77. partly

78. independent authenticator

79. promotional

80. evaluate

81. Aktiengesellschaft

82. fraudulent

83. general audit

84. average balance

85. government-controlled

86. external

87. Chief Secretary to the Treasury

88. London Bullion Market

89. deposit-taking institution

90. Chartered Asset Manager (CAM)

91. bank of first deposit (BOFD)

92. fair deal

93. Troubled Assets Relief Program

94. board order

95. improved offer

96. avoirdupois

97. lending facility

98. damp down

99. manpower forecasting

100. stockpicking

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Featured term of the day

Definition / Meaning of

Stale Price Arbitrage

Categories: Finance,

for a number of assets, the most recent transaction price at 4PM ET does not fully reflect all available market information. One example is international equities that trade on exchanges that are located in different time zones and close 2-15 hours before U.S. markets. In addition, domestic small-capitalization equities and high-yield and convertible bonds often trade infrequently and have wide bid-ask spreads. This can cause the most recent transaction price to be much different from the price that one would see in a liquid market at 4 PM, even for assets that trade on exchanges that are open at that time. Investors can take advantage of mutual funds that calculate their NAVs using stale closing prices by trading based on recent market movements. For example, if the U.S. market has risen since the close of overseas equity markets, investors can expect that overseas markets will open higher the following morning. Investors can buy a fund with a stale-price NAV for less than its current value, and they can likewise sell a fund for more than its current value on a day that the U.S. market has fallen. Similar opportunities exist when the values of infrequently or illiquidly-traded domestic assets have recently changed. With normal market arbitrage, as more traders learn where to buy an item at relatively low cost and where to sell it at relatively high value, market pressures from such traders tend to stabilize prices. With stale price arbitrage, there is no corresponding pressure for market correction. That is, a fund always pays the going market rate even if that fund has an agreement with its customers to only charge them the price from the prior day closing. Accordingly, even if such agreements ultimately impact the prices of trades by the mutual funds, there is no impact on the price paid by the customer of the mutual fund. In that sense, the stale price arbitrage opportunity can last as long as a mutual fund honors its stale price agreement with its customers. Also referred to as net asset value arbitrage or nav arbitrage.

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9. Homeowner's Insurance
10. Roth 401(k)

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