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In foreign exchange trading (FX), a rollover is the action taking place at end of day, where all open positions with value date equals SPOT, will be rolled over to the next business day. [1] This happens since in FX trading the trader doesn't want to actually buy the traded currencies but to continue to trade until position is closed. [ 2 ]
While holding US Treasuries, one may wish to hold only the most recently issued security of a given maturity, the so-called on-the-run security. Thus, if one has purchased the on-the-run 30-year treasury and a new 30-year auction occurs, one may sell the old treasury, which is now off-the-run, and purchase the new on-the-run treasury.
As interest rates change, forex markets can swing drastically. Leverage: Most forex trading involves the use of leverage, or borrowed money. The nature of leverage is that it magnifies gains and ...
A certificate of deposit rollover is the process of transferring money from an existing CD into a new one as soon as it matures. It's a way to reinvest the principal and/or interest for a new...
Simple payoff diagrams of the four types of ladder. In finance, a ladder, also known as a Christmas tree, is a combination of three options of the same type (all calls or all puts) at three different strike prices. [1]
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The forward exchange rate depends on three known variables: the spot exchange rate, the domestic interest rate, and the foreign interest rate. This effectively means that the forward rate is the price of a forward contract, which derives its value from the pricing of spot contracts and the addition of information on available interest rates. [4]
In finance, a spread trade (also known as a relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit.Spread trades are usually executed with options or futures contracts as the legs, but other securities are sometimes used.