Search results
Results From The WOW.Com Content Network
In the context of an interest rate swap, the notional principal amount is the specified amount on which the exchanged interest payments are based; this could be 8000 US dollars, or 2.7 million pounds sterling, or any other combination of a number and a currency. Each period's rates are multiplied by the notional principal amount to determine ...
In banking, a minimum daily balance is the minimum balance that a banking institution requires account holders to have in their accounts each day in order to waive maintenance fees. [1] This is not to be confused with the average daily balance, which is computed as the sum of daily balances in a billing period divided by the number of days.
The DV01 is analogous to the delta in derivative pricing (one of the "Greeks") – it is the ratio of a price change in output (dollars) to unit change in input (a basis point of yield). Dollar duration or DV01 is the change in price in dollars, not in percentage. It gives the dollar variation in a bond's value per unit change in the yield.
By contrast, an annual effective rate of interest is calculated by dividing the amount of interest earned during a one-year period by the balance of money at the beginning of the year. The present value (today) of a payment of 1 that is to be made n {\displaystyle \,n} years in the future is ( 1 − d ) n {\displaystyle \,{(1-d)}^{n}} .
Time value of money problems involve the net value of cash flows at different points in time. In a typical case, the variables might be: a balance (the real or nominal value of a debt or a financial asset in terms of monetary units), a periodic rate of interest, the number of periods, and a series of cash flows. (In the case of a debt, cas
As explained above, the return, or rate or return, depends on the currency of measurement. In the example given above, a US dollar cash deposit which returns 2% over a year, measured in US dollars, returns 12.2% measured in Japanese yen, over the same period, if the US dollar increases in value by 10% against the Japanese yen over the same period.
Discover the latest breaking news in the U.S. and around the world — politics, weather, entertainment, lifestyle, finance, sports and much more.
For example, if the delta of a call is 0.42 then one can compute the delta of the corresponding put at the same strike price by 0.42 − 1 = −0.58. To derive the delta of a call from a put, one can similarly take −0.58 and add 1 to get 0.42.