F - Return to Index
F - Is the Commodity Futures Symbol which represents the January Delivery Month.
Fair Value - Is viewed as the indifference point from a modeling perspective as to whether to buy or sell an instrument or market. If the market price were higher than fair value it would suggest selling the security. If the security was trading at less than fair value it would suggest buying it. When coupled with related derivative instruments, the approach becomes an arbitrage one.
Fair Value Difference - Is the disparity between an instrumentís trading price and its computed value.
FANS - Is the Funds Availability Notification System.
FASB - Is the Financial Accounting Standards Board.
Fast Market - Is a trading condition when prices change quickly and volume is dramatic. At these times, the price reports are behind and a trading range of prices is substituted for price dissemination. Often special rules apply at such times.
Fat Tails - Describes the appearance of a probability curve which has a higher-than-normally-expected occurrence of observations in the remote areas, or tails, away from the mean.
FBO - Refers to For Benefit Of. Term is often used in wire transfer instructions. Here, it indicates the party for whom the money is to be ultimately credited.
FCM - Is a type of brokerage firm. See Futures Commission Merchant.
FCOP - Is a Foreign Currency Options Principal.
FDIC - Is the Federal Deposit Insurance Corporation.
FED - Is the Federal Reserve Bank.
FFIEC - Is the Federal Financial Institutions Examination Council.
FHLMC - Is the Federal Home Loan Mortgage Corporation or Freddie Mac.
FICO - Refers to Fair, Isaac credit scoring. This can be the corporation, the credit scoring algorithms, processes or scores.
FIFO - See First-In First-Out.
Fill or Kill - Is an order that must be immediately executed in its entirety or it is canceled. There are no partial fills with this type of order.
Finance Charge - Is the total cost borne by a borrower to obtain credit. It includes: interest, points, and fees.
Financial Accounting Standards Board - Is the industry organization which provides guidelines for the recording, reporting and presentation of financial market transactions. Included in this work are the requirements for listing off-balance sheet items and hedging transactions for currencies, physicals, and financials.
Financial Formulas or Formulae - Are mathematical expressions to enable repeatable results or computations. Many financial formulas are related to one another. Some of the standard computations are:
Fineness - Is a measure of the purity of a precious metal such as gold. Three 9s or .999 shows the relative purity of gold. Here, there would be an .001 part of impurity for the specimen.
FIPS - Is the Fixed Income Pricing System which is operated and maintained by Nasdaq. It focuses on high yield securities. Bonds must be rated no higher than BB+ by Standard & Poor's, here.
FIR - Is the Futures Initial Requirement. It refers to the amount of the original margin or performance bond.
Fire Sale - Refers to the rapid disposition of positions. This often occurs at less than fair value versus transactions conducted under more favorable or orderly conditions.
FIRREA - Is the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
First-In First-Out - Is the accounting technique whereby the first items in inventory are paired against the first items sold out of inventory. Speculative futures transactions are treated this way. Securities transactions can be treated this way in the absence of further instructions. See Versus Purchase.
First Notice Day - Is the day when notices or intents to make a delivery are permitted.
Fixed Assets - Refer to items such as buildings, furniture, memberships, and long-term leases. Typically, these properties are not intended for sale or disposal within a year.
Flat - Is a condition where a bond is traded without accrued interest.
Flat Market - Is a term structure whereby the various delivery months are basically trading at the same price level or yield.
Flatness - Is the relatively flat appearance for a probability distribution. See Platykurtic and compare Leptokurtic.
Flip or To Flip - Refers to a trade executed within a relatively short timeframe.
Flipper - Is a trader who takes quick advantage of a profit. It often refers to individuals - not financial institutions - who quickly sell their Initial Public Offering (IPO) positions.
Floater - Is an instrument whose cash flow varies according to stipulated factors. These instruments can also be leveraged by a multiplier which alters the associated interest payment stream.
Floating Rate - Refers to the condition whereby exchange rates are relatively free to change. It can also refer to an interest rate which changes relatively quickly or frequently.
Flotation - Is the initial offering of stock to the public.
Floor - Is the lower limit price or interest rate.
Floor Broker - Is a member of an exchange who executes orders for others. This compares to a Floor Trader.
Floor Trader - Is a member of an exchange who trades for his or her own personal account. This compares to a Floor Broker.
FLUX - Is the Flow Uncertainty Index. It refers to a financial model developed for the National Association of Insurance Commissioners to quantify the relative risk or variability of CMOs over a range of interest rate scenarios.
FNMA - Is the Federal National Mortgage Association or Fannie Mae.
FOB - Refers to Free on Board.
FOK - See Fill or Kill.
FOMC - Is the Federal Open Market Committee.
Foreign Exchange - Refers to currencies other than the United States dollar. It also refers to transactions, activities, and operations for trading, hedging, and investing in multiple currencies.
Forward - Is a market similar to futures in terms of deferred deliveries. However, notable differences include the lack of contract standardization, the lack of a central clearinghouse, the potential for substantial counterparty risk, but it allows contractual term customization and deliveries at times, points and grades other than those listed for futures contracts. It is also used to refer to the bank currency market.
FRA - Is a Forward Rate Agreement.
FRCMO - Is a Floating Rate Collateralized Mortgage Obligation.
Free Riding - Has several meanings. It can refer to a customer account which engaged in purchases and sales without paying for the securities. There are several exceptions for some markets which may permit day-trading waivers or no reconciliation until final settlement or reciprocal closeout of position.
It can refer to an underwriter withholding a portion of a hot issue for the benefit of its own account.
Free Trade - Refers to the unrestricted or unimpeded process of conducting business or transactions.
FRM - Is a Fixed Rate Mortgage.
FRN - Is a Floating Rate Note.
Front-End Load - Refers to charges which are imposed upon the purchase or acquisition of an investment position. Many times these charges are on a sliding scale. Sometimes, these charges are viewed as impediments for early withdrawals. They are called front-end because they occur at the beginning of the investment process.
Front Office - Is the area or function which relates to trading, investing, or sales activities for a financial firm. Orders start here, flow through the middle office, if any, and get processed by the back office. See Back Office and Middle Office for related terms.
Frozen Account - Occurs when a client fails to pay for securities within the allotted time. Subsequent transactions can only occur if the account has sufficient funds or securities on deposit to complete the transactions. The frozen status or freeze can be removed only after the account complies with existing rules and regulations for an established time frame.
Fundamental Analysis - Is the research approach which considers economic and monetary factors. For securities it evaluates the company as well as the industry and economy. For commodities, it looks at supply and demand in terms of actual usage, production and inventories among other things.
Futures Commission Merchant - Is a firm which is registered to do customer business in the futures and options-on-futures business. This customer business relates to the taking of orders for contract execution.
Futures Contracts - Are instruments predicated on a cash commodity or currency, a financial instrument, or an index. These are standardized contracts which are traded on organized exchanges. Also, these contracts are subject to industry and exchange regulations and government regulatory bodies and laws. The standardization is one of the key factors which differentiates these instruments from forward contracts. Other factors are the standardization of margin or performance bond procedures and the high degree of anonymous offset.
Futures contracts can be offset by a trade opposite to the initial transaction, and EFP, or a good delivery. Good deliveries can be satisfied by either the delivery of the actual commodity or financial instrument or by a final cash payment for Cash Settlement markets.
Futures Contract Equivalency - Serves two key purposes. First, it converts the hedgeable positions into standardized units. Secondly, it allows these standardized units to be used as building blocks. When used as building blocks, option characteristics can be more clearly established. For example, an initial equivalency for treasury notes and bonds is the conversion factor. It relates various coupons and maturities into economically deliverable, not necessarily perfectly priced, units.
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Copyright © 1998-2003 Barkley International Inc. All Rights Reserved. - Page created Tuesday, May 19, 1998 by Oasis Management®. Last Modified on Sunday, June 16, 2019.