We continue our acquaintance with the terminology of the stock and investment markets.
We continue our acquaintance with the terminology of the stock and investment markets.
👌Dealer — This is a person who buys or sells securities at his own expense.
For securities in general, this is an individual or company acting as a principal in transactions. Principals are market makers who trade at their own expense and at their own risk.
👌Long position — This is the purchase of securities, currency or other asset in the expectation of an increase in their value. Corresponds to the investment strategy “buy and hold”. Bulls are called bulls.
👌Profit — This is the percentage annual rate of return received from an investment.
In relation to shares, yield means the profit received from stocks in the form of dividends. The figures are mainly presented as a percentage and are calculated as annual dividend payments divided by the current stocks price.
In relation to bonds, the term yield means the real interest rate and is calculated as follows: the coupon rate divided by the market value of the bond.
Investors can use “yield” to evaluate their investment and compare it to other financial instruments. Riskier securities often offer higher returns to compensate for the risk.
👌Profit at maturity — This is the rate of internal cash flow return on a bond if the buyer intends to hold it to maturity.
This indicator allows the investor to calculate the fair value of the bond. Its calculation is similar to the calculation of the internal rate of return.
If the current profit is less than YTM, then the bond should be sold at a discount.
If the current yield is YTM, then the bond should sell at par.
If the current yield is greater than YTM, then the bond sells at a premium.
👌Eurocurrency — In this case, “Euro” means “outside a specific country”.
For example, “Eurodollar” is a certificate of deposit denominated in US dollars in some other country (usually they are traded in London).
“Euroyen” — a certificate of deposit in yen outside of Japan.
