Cash-And-Carry-Arbitrage

Cash-and-carry-arbitrage is a market-neutral strategy combining the purchase of a long position in an asset such as a stock or commodity, and the sale (short) of a position in a futures contract on that same underlying asset. It seeks to exploit pricing inefficiencies for the asset in the cash (or spot) market and futures market, in order to make profits.

Spot Market

A spot market is a market where buyers and sellers immediately conduct the delivery and payment of goods, currencies, or other assets at the time of the transaction. In this market, the transaction price is determined instantly, and the delivery and payment are usually completed shortly after the transaction is agreed upon.

Spot Trade

A spot trade, also known as a spot transaction, refers to the purchase or sale of a foreign currency, financial instrument, or commodity for instant delivery on a specified spot date. Most spot contracts include the physical delivery of the currency, commodity, or instrument; the difference in the price of a future or forward contract versus a spot contract takes into account the time value of the payment, based on interest rates and the time to maturity. In a foreign exchange spot trade, the exchange rate on which the transaction is based is referred to as the spot exchange rate.A spot trade can be contrasted with a forward or futures trade.

Explicit Cost

Explicit costs are normal business costs that appear in a company’s general ledger and directly affect its profitability. They have clearly defined dollar amounts that flow through to the income statement. Examples of explicit costs include wages, lease payments, utilities, raw materials, and other direct costs.

Idle Time

Idle time is paid time that an employee, or machine, is unproductive due to factors that can either be controlled or uncontrolled by management. It normally applies to full-time workers rather than consultants, who typically have to bill for every hour of their time.

First In, First Out

First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first.For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement's cost of goods sold (COGS). The remaining inventory assets are matched to the assets that are most recently purchased or produced.

Sharpe Ratio

The Sharpe Ratio is a measure of the return on an investment relative to its risk. It is calculated by subtracting the risk-free rate from the investment return and then dividing by the volatility of the investment. A higher Sharpe Ratio indicates that the investment yields higher returns for the same level of risk.

Whitewash Resolution

Whitewash resolution is a European term used in conjunction with the Companies Act of 1985, which refers to a resolution that must be passed before a target company in a buyout situation can give financial assistance to the buyer of the target. A whitewash resolution occurs when directors of the target company must swear that the company will be able to pay its debts for a period of at least 12 months. Oftentimes, an auditor must then confirm the company's solvency.

Western Account

A Western Account is a type of joint underwriting arrangement where all participating underwriters share the responsibility of selling the securities. Each underwriter is proportionally responsible for any unsold securities. This means that if some securities remain unsold, all underwriters will collectively share the burden of these unsold securities according to their underwriting shares.

Samurai Bond

A Samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.Other types of yen-denominated bonds are called Euroyens and issued in countries other than Japan, typically in London.

Five-Year Rule

The Five-Year Rule refers to a condition that must be met when withdrawing funds from certain retirement accounts or investment plans, requiring that the funds must have been held in the account for at least five years to be tax-free or to avoid penalties. This rule is intended to encourage long-term investment and savings, ensuring that account holders do not withdraw funds prematurely.

Without Recourse

"Without recourse" means that one party cannot obtain a judgment against, or reimbursement from, a defaulting or opposing party in a financial transaction. When the buyer of a promissory note or other negotiable instrument enters into a "no recourse" agreement, they assume the risk of default.

Walk-Away Lease

A walk-away lease is an auto lease that allows the lessee to return the car at the end of the lease period without any financial obligations based on the car’s residual value.

Intangible Asset

An intangible asset is one that is not physical in nature. Since intangible assets have no shape or form, they cannot be held or manipulated. Common types of intangible assets include brands, goodwill, and intellectual property. Businesses have several ways to value these assets, which can be challenging because they have no shape or form. They are in contrast to tangible assets, which have physical forms and can be held.

Invisible Hand

The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are fulfilled. The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade.The term "invisible hand" first appeared in Adam Smith's famous work, to describe how free markets can incentivize individuals, acting in their own self-interest, to produce what is societally necessary.

Bearer Share

A bearer share is equity security wholly owned by the person or entity that holds the physical stock certificate, thus the name "bearer" share. The issuing firm neither registers the owner of the stock nor tracks transfers of ownership; the company disperses dividends to bearer shares when a physical coupon is presented to the firm. Because the share is not registered to any authority, transferring the ownership of the stock involves only delivering the physical document.

Harmless Warrant

The term harmless warrant refers to a provision that requires bondholders to surrender an existing bond if they want to purchase the same type of bond from the issuer. Put simply, bond issuers put harmless warrants on their bonds, requiring investors to swap their existing bond if they want to purchase another one with similar features from the same issuer. Harmless warrants are a safety net for bond issuers as they help keep their debt levels in check.

Voodoo Accounting

The term voodoo accounting refers to a creative and unethical method of accounting that artificially inflates figures found on a company's financial statements. Voodoo accounting employs numerous accounting gimmicks to boost the bottom line by inflating revenue, concealing expenses, or both.The individual accounting maneuvers used in voodoo accounting may be minor, and one-time accounting gimmicks may be ignored by investors. However, repeat offenses often affect the company’s market value and reputation for the worse.

Dark Cloud Cover

Dark Cloud Cover is a bearish reversal candlestick pattern where a down candle (typically black or red) opens above the close of the prior up candle (typically white or green), and then closes below the midpoint of the up candle.The pattern is significant as it shows a shift in the momentum from the upside to the downside. The pattern is created by an up candle followed by a down candle. Traders look for the price to continue lower on the next (third) candle. This is called confirmation.

Winsorized Mean

Winsorized mean is a method of averaging that initially replaces the smallest and largest values with the observations closest to them. This is done to limit the effect of outliers or abnormal extreme values, or outliers, on the calculation.After replacing the values, the arithmetic mean formula is then used to calculate the winsorized mean.

Warm Calling

Warm calling is the solicitation of a potential customer with whom a sales representative or their firm has had some prior contact. It refers to a sales call, a visit or an email that's preceded by some sort of contact with the prospect, such as a direct mail campaign, an introduction at a business event, or a referral.Warm calling is the opposite of cold calling, the solicitation of prospects who weren't anticipating such interaction and with whom the sales representative or business has not had prior contact.