Alphabetical - B

Back OfficeAccounting and Settlements
Back-TestingTesting a value-at-risk or other model using historic data.
BackwardationWhen the spot or near term price of a commodity is higher than the forward rate.
Backwards InductionA procedure for working from the end of a tree to its neginning in order to value an option.
Bank BillA Bill of Exchange accepted by a bank on the central bank's "eligible" list. The central bank itself would rediscount a bill of this type. Also called an Eligible Bill
Bankers AcceptanceBills of exchange acceppted by large banks
Bankers Automated Clearing Services??
Barrier OptionAn option whose payoff depends on whether the path of the underlying asset has reached a barrier (i.e. a certain predetermined level).
Base Currency??
Base Rate??
BasisThe difference between the spot price and the futures price of the commodity.
Basis PointOne hundredth of a percent (0.01%)
Basis RiskWhen relationships between products used to hedge each other change or break down
Basis SwapSwap where cash flows determined by one floating reference rate are exchanged for cash flows determined by another floating reference rate.
Basket OptionAn option that provides a payoff dependent on the value of a portfolio of assets.
BearA pessimist - selling securities in the belief of a falling stock and bond market, hence a "Bear" market
Bear MarketA falling market
Bear SpreadA short position in a put option with a strike price X1 combined with a long position in a put option with strike price X2 where X2 > X1. (A bear spread can also be created with call options).
Bearer BondA bond payable to whoever is in possession - that is no central register
Bed and BreakfastSelling shares one day and buying them back the next - at the end of the tax year to maximise Capital Gains Tax allowance or claim losses against profits
Bermudan OptionAn option that can be exercides on specified dates during its life.
BetaA measure of systematic risk of an asset.
Bid PriceThe price that a dealer is prepared to pay for an asset.
Bid RateRate of interest offered for deposits in banking. Generally the dealer's buying price for equities, bonds, foreign exchange etc
Bid-Ask SpreadThe amount by which the ask price exceeds the bid.
Bid-Offer Spreadsame as Bid-Ask Spread
Big BangDeregulation of the UK Stock Market 27 October 1986. New regulation and an automated price quotation system. The day when minimum commissions were abolished
BillA short-term (3 months or so) instrument which pays interest to the holder and can be traded. Some bills do not pay interest but are issued at a discount to their face value.
Bill of ExchangeA signed promise to pay by a receiver of goods or services and kept by the supplier.
Binary OptionOption with discontinuous payoff; for example a cash-or-nothing option or an asset-or-nothing option.
Binomial ModelA model where the price of an asset is monitored over successive short periods of time. In each short period of time it is assumed that only two price movements are possible.
Binomial TreeA tree that represents how an asset price can evolve under the binomial model.
Blacks ApproximationAn approximate procedure developed by Fischer Black for valuing a call option on a dividend paying stock.
Blacks ModelAn extension of the Black Scholes model for valuing European Options on futures contracts.
Black-Scholes ModelThe original European Stock Option pricing model written by Black and Schole in 1972
Blue ChipLarge established companies. The most highly regarded shares.
Board WashingThe individual who handles limit orders in some exchanges. The board broker makes information on outstanding limit orders available to other traders.
BOBLShort name for the short-term German government bond contract on the DTB
BondAn instrument that pays a fixed amount of interest to the holder.
Bond Factor??
Bond Ladder ??
Bond OptionAn option where a bond is the underlying asset.
Bond Provisions??
Bond Stripping??
Bond WashingSelling a bond prior to the ex dividend date to take a capital gain instead of receiving income.
BonosSpanish Government Bonds
Bonus IssueA free issue of shares to existing shareholders
Bonus Value??
Book Entry??
Book ValueThe value of an asset as entered in a company's balance sheet
Bootstrap MethodA procedure for calculating the zero-coupon yield curver from market data.
Boston Optionsee Deferred payment option
Break Forwardsee Deferred payment option
BrokerAn individual (or firm) that acts as an intermediary putting buyers and sellers together for a brokerage fee.
Building SocietyInstitutions whose primary function is to accept the savings of small investors and channel them to house buyers in return for the security of a mortgage on the property.
BullAn optimist, buying securities in the belief of a rising (stock and bond) market, hence a bull market
Bull MarketA rising market
Bull SpreadBuying a call option (a long position in a call) with a strike X1 combined with selling a call (short position in a call) with a strike price X2 where X2>X1 (a bull spread can also be created using put options).
Bullet RepaymentThe whole of a bond or bank loan is repaid at maturity (instead of staged payments in the last few years)
BundesbankThe German Central Bank
Butterfly SpreadA position that is created by taking a long position in a call with strike price X1, a long position in a call with strike price X3 and a short position in two calls with strike price X2 where X3 > X2 > X1 and X2 = 0.5(X1 + X2).
Back Office
Accounting and Settlements
Back-Testing
Testing a value-at-risk or other model using historic data.
Backwardation
When the spot or near term price of a commodity is higher than the forward rate.
Backwards Induction
A procedure for working from the end of a tree to its neginning in order to value an option.
Bank Bill
A Bill of Exchange accepted by a bank on the central bank's "eligible" list. The central bank itself would rediscount a bill of this type. Also called an Eligible Bill
Bankers Acceptance
Bills of exchange acceppted by large banks
Bankers Automated Clearing Services
??
Barrier Option
An option whose payoff depends on whether the path of the underlying asset has reached a barrier (i.e. a certain predetermined level).
Base Currency
??
Base Rate
??
Basis
The difference between the spot price and the futures price of the commodity.
Basis Point
One hundredth of a percent (0.01%)
Basis Risk
When relationships between products used to hedge each other change or break down
Basis Swap
Swap where cash flows determined by one floating reference rate are exchanged for cash flows determined by another floating reference rate.
Basket Option
An option that provides a payoff dependent on the value of a portfolio of assets.
Bear
A pessimist - selling securities in the belief of a falling stock and bond market, hence a "Bear" market
Bear Market
A falling market
Bear Spread
A short position in a put option with a strike price X1 combined with a long position in a put option with strike price X2 where X2 > X1. (A bear spread can also be created with call options).
Bearer Bond
A bond payable to whoever is in possession - that is no central register
Bed and Breakfast
Selling shares one day and buying them back the next - at the end of the tax year to maximise Capital Gains Tax allowance or claim losses against profits
Bermudan Option
An option that can be exercides on specified dates during its life.
Beta
A measure of systematic risk of an asset.
Bid Price
The price that a dealer is prepared to pay for an asset.
Bid Rate
Rate of interest offered for deposits in banking. Generally the dealer's buying price for equities, bonds, foreign exchange etc
Bid-Ask Spread
The amount by which the ask price exceeds the bid.
Bid-Offer Spread
same as Bid-Ask Spread
Big Bang
Deregulation of the UK Stock Market 27 October 1986. New regulation and an automated price quotation system. The day when minimum commissions were abolished
Bill
A short-term (3 months or so) instrument which pays interest to the holder and can be traded. Some bills do not pay interest but are issued at a discount to their face value.
Bill of Exchange
A signed promise to pay by a receiver of goods or services and kept by the supplier.
Binary Option
Option with discontinuous payoff; for example a cash-or-nothing option or an asset-or-nothing option.
Binomial Model
A model where the price of an asset is monitored over successive short periods of time. In each short period of time it is assumed that only two price movements are possible.
Binomial Tree
A tree that represents how an asset price can evolve under the binomial model.
Blacks Approximation
An approximate procedure developed by Fischer Black for valuing a call option on a dividend paying stock.
Blacks Model
An extension of the Black Scholes model for valuing European Options on futures contracts.
Black-Scholes Model
The original European Stock Option pricing model written by Black and Schole in 1972
Blue Chip
Large established companies. The most highly regarded shares.
Board Washing
The individual who handles limit orders in some exchanges. The board broker makes information on outstanding limit orders available to other traders.
BOBL
Short name for the short-term German government bond contract on the DTB
Bond
An instrument that pays a fixed amount of interest to the holder.
Bond Factor
??
Bond Ladder
??
Bond Option
An option where a bond is the underlying asset.
Bond Provisions
??
Bond Stripping
??
Bond Washing
Selling a bond prior to the ex dividend date to take a capital gain instead of receiving income.
Bonos
Spanish Government Bonds
Bonus Issue
A free issue of shares to existing shareholders
Bonus Value
??
Book Entry
??
Book Value
The value of an asset as entered in a company's balance sheet
Bootstrap Method
A procedure for calculating the zero-coupon yield curver from market data.
Boston Option
see Deferred payment option
Break Forward
see Deferred payment option
Broker
An individual (or firm) that acts as an intermediary putting buyers and sellers together for a brokerage fee.
Building Society
Institutions whose primary function is to accept the savings of small investors and channel them to house buyers in return for the security of a mortgage on the property.
Bull
An optimist, buying securities in the belief of a rising (stock and bond) market, hence a bull market
Bull Market
A rising market
Bull Spread
Buying a call option (a long position in a call) with a strike X1 combined with selling a call (short position in a call) with a strike price X2 where X2>X1 (a bull spread can also be created using put options).
Bullet Repayment
The whole of a bond or bank loan is repaid at maturity (instead of staged payments in the last few years)
Bundesbank
The German Central Bank
Butterfly Spread
A position that is created by taking a long position in a call with strike price X1, a long position in a call with strike price X3 and a short position in two calls with strike price X2 where X3 > X2 > X1 and X2 = 0.5(X1 + X2).

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