Resources

FAIR MARKET PRICE

Amount at which an asset would change hands between two parties, were both have knowledge of the relevant facts.

FAST MARKET

A financial market that has a combination of high volatility and heavy trading.

FED

The United States Federal Reserve. The 7-member Board of Governors that oversees Federal Reserve Banks, establishes monetary policy, and monitors the economic health of the country.

FED FUND RATE

The interest rate at which banks lend to each other overnight. This is a closely watched short term interest rate that the Fed controls through open market operations.

FEDERAL OPEN MARKET COMMITTEE

A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by buying and selling government securities which affects the federal funds rate).

FEDERAL RESERVE BOARD

The 7-member Board of Governors that oversees Federal Reserve Banks. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms. Also called the Fed.

FEDERAL RESERVE SYSTEM

The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board.

FIDUCIARY

One who must act for the benefit of another party.

FILL

The price at which an order is executed.

FILL OR KILL

A exchange traded order that is canceled unless executed within a designated time period.

FINANCE COMPANY

A company whose business and primary function is to make loans to individuals, while not receiving deposits like a bank.

FINANCIAL ANALYSTS

Professionals who analyze financial statements, interview corporate executives, and attend trade shows in order to write reports recommending either purchasing, selling, or holding various stocks.

FINANCIAL FUTURE

A futures contract based on a financial instrument.

FINANCIAL INSTITUTION

An enterprise such as a bank whose primary business and function is to collect money from the public and invest it in financial assets.

FINANCIAL MARKET

An organized institutional structure for creating and exchanging financial assets.

FISCAL POLICY

Government spending and taxing for the specific purpose of stabilizing the economy.

FIXED EXCHANGE RATE

Official rate set by monetary authorities. Often the fixed exchange rate permits fluctuation within a band.

FIXING

A method for determining fixed rates. Such a process occurs either once or twice daily at defined times. The system is also used in the London Bullion market.

FLEXIBLE EXCHANGE RATE

Exchange rates with a fixed parity against one or more currencies with frequent revaluation. A form of managed float.

FLOATING EXCHANGE RATE

An exchange rate where the value is determined by market forces.

FLOATING PROFIT/LOSS

The profit/loss that may only be realized if the open contracts are liquidated (settled).

FLOOR

An exchanges trading area. May also be used as the lower limit of an option or an interest rate.

FOMC

See Federal Open Market Committee.

FORCED LIQUIDATION

The premature closing out of a contract when an investor is unable to meet a margin call.

FOREIGN EXCHANGE

The purchase or sale of a currency against another.

FOREX

An over-the-counter market where buyers and sellers conduct foreign exchange transactions.

FORWARD CONTRACT

A cash market transaction between a bank and a customer in which the seller agrees to deliver a specific cash commodity to the buyer at some point in the future. Unlike futures contracts, forward contracts are privately negotiated and are not standardized.

FORWARD DEAL

A deal with a value date greater than spot.

FORWARD OUTRIGHT

A commitment to buy or sell a currency for delivery on a specified future date or period. The price is quoted as the Spot rate, minus or plus the forward points for the chosen period.

FORWARD RATE

Forward rates are quoted in terms of forward points or pips, which represents the difference between the forward and spot rates. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction.

FORWARD RATE AGREEMENTS

FRA - A forward contract that specifies an interest rate to be paid on an obligation beginning on some future date.

FREE RESERVES

Total reserves held by a bank less the reserves required by the authority.

FRONT OFFICE

The activities carried out by the dealer.

FUNDAMENTALS

The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, interest rates, etc…

FUTURES CONTRACT

A standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date.

FX

An over-the-counter market where buyers and sellers conduct foreign exchange transactions.